Thursday, December 22, 2016

The Pragmatarian Model For The NY Times

Today I was on my phone checking out Twitter.  I saw this tweet...



The topic looked interesting so I clicked on the link.  A couple seconds after doing so, I was immediately redirected to a subscription page.  I scrolled up and down trying to find the escape pod.  Unfortunately there was no obvious exit sign and I ended up accidentally clicking on a chat button.

When life gives you lemons...

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Thank you for contacting The New York Times. We appreciate your business and are always happy to help.

Info at 13:39, Dec 22: You are now chatting with 'Isaac'

Isaac at 13:39, Dec 22: Hi, this is Isaac from The New York Times. How may I assist you today?

you at 13:40, Dec 22: Hi. If I subscribe can I choose which articles I spend my fees on? I don't value all your articles equally.

Isaac at 13:41, Dec 22: Don't worry about spending your fees; if you purchase a subscription, you'll have unlimited access to all of our articles.

you at 13:42, Dec 22: Sure... but how will you know my actual demand for topics?

Isaac at 13:43, Dec 22: You only have to log in with your email account, and you'll be able to read any article you want. How does that sound?

you at 13:45, Dec 22: I am not at all interested in sports and wouldn't want any of my fees paying for sports articles.

Isaac at 13:47, Dec 22: Don't worry about that, since you can choose what articles to view. However, since the price is based on a regular subscription and not in the number of articles you read, the pricing will be the same. Is that what you wanted to know?

you at 13:50, Dec 22: I want to be able to use my fees to provide you folks with positive feedback. Say I happen to really love an article. I'd like to have the freedom to spend a lot of my fees on that article. Then you would know that I truly loved the article. Aren't you folks interested in feedback from your subscribers?

Isaac at 13:53, Dec 22: Sure! The best way you can give us feedback if you really enjoy an article is to share it through your favorite social network. You can also provide us with specific feedback, if you want, by emailing executive-editor@nytimes.com. You can also send a letter to letters@nytimes.com, if you want

you at 13:56, Dec 22: Can you cite any sources to substantiate your claim that contigent valuation techniques are truly the best way to provide feedback?

Isaac at 13:59, Dec 22: You can view on http://www.nytimes.com/trending/ the most popular stories we have right now. The stories that appear there are the ones that get the most views per hour, and the best way you can help attracting views to an article is to share it with more people.

you at 14:02, Dec 22: Imagine if subscribers could spend their fees on their favorite stories. Then you would know the true value of your stories. Do you think that your most valuable stories would also be your most popular stories?

Isaac at 14:07, Dec 22: I totally agree with you. I think there should be a way for readers to provide direct feedback when they stumble upon a truly great article. However, since all of our subscriptors are provided with unlimited credit to view any article they want, the only measure we have of the quality of an article is its absolute number of views, so that's what we use as a metric for them. By only reading the articles you prefer, you're helping us find out what the best ones are. What do you think about that?

you at 14:13, Dec 22: Just because I listen to a speech by Trump really doesn't mean that I'd be willing to spend a penny on his speech. Right now you want me to spend my money on your publication. If it only cost a penny per year then no problem. But the more money you want me to spend... the greater my sacrifice. Spending money is mSo if I'm already paying your company a monthly fee... why not give me the opportunity to use it to indicate which of your articles is most worth my sacrifice?

Isaac at 14:18, Dec 22: By watching a speech by Trump you're not supporting him; you're supporting the editor that made the speech available to you. We work every day to make our articles as neutral and unbiased as possible, so instead of supporting a political idea, you're supporting the writers, editors and publishers who bring the information to you. Don't you think it's better not having to worry about reading 20, 200 or 2000 articles?

Isaac at 14:19, Dec 22: The cost of making an article is the same regardless of the number of views it gets, but the popularity of a certain group or articles can determine which articles or writers make it to the front page next time.

you at 14:23, Dec 22: I think you'll agree that it matters whether I give my money to your publication or to The Economist. Clearly it makes sense for me to give my money to whichever publication provides me with the most bang for my buck. But if my preferences for publications matter then why don't my preferences for individual articles matter?

Isaac at 14:26, Dec 22: We think you should be able to read whatever articles you prefer, and that's why we give you unlimited access to all of our digital collection; instead of limiting the number of articles you may choose.

you at 14:28, Dec 22: Do you think it would be difficult to allow me to choose which articles I allocate my fees to?

Isaac at 14:30, Dec 22: Yes, since that would require a huge change on our pricing and subscription methods. Figuratively speaking, you're not renting individual books; you're buying a ticket to enter the whole library.

you at 14:37, Dec 22: I don't mind spending $10 on a ticket to enter the library. Good analogy. But since I have $10 dollars... why not give me the opportunity to choose which books I allocate my 1000 pennies on? I wouldn't allocate a penny on 50 Shades of Grey but I would allocate many pennies to the Wealth of Nations by Adam Smith. When everyone else also allocated their fees then we'd know at a glance which book in the library was the most valuable.

Isaac at 14:45, Dec 22: I completely agree with you. I know that right now we are only using views as a metric of the quality of an article, but sometimes you don't really agree with what you read, and you think it does not deserve the money you've spent on reading it. My best suggestion as of now is to call 855-698-8544, which is our Digital Subscriptions department for mobile users. It is indeed possible to filter or otherwise categorize the articles you read; however, I am unable to do it. I'm really sorry for the inconveniences this may cause.

Isaac at 14:45, Dec 22: Is there anything else I can assist you with today?

you at 14:48, Dec 22: I ended up on this page because I was trying to read one of my 10 free articles but I kept getting redirected to the subscription gateway. How do I escape from the gateway and read the article?

Isaac at 14:49, Dec 22: There should be a "Read Full Article" button that allows you to read it for free, in the article preview

you at 14:50, Dec 22: Yes there is but a couple seconds later I'm automatically redirected to the subscription gateway.

Isaac at 14:51, Dec 22: My best suggestion is to try reading the article on a laptop or desktop computer.

you at 14:54, Dec 22: K. I'll try that. FYI I'm going to post our discussion on my blog... The Pragmatarian Model For The NY Times. Thanks for your time.

Isaac at 14:55, Dec 22: You're welcome! I'll keep that in mind. I hope I was able to help you today.


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I was honestly surprised that he chatted with me as long as he did.

Now I'm on my laptop and I was able to read the article.  Eh. My expectation was greater than the reality.  So I wouldn't have spent any pennies on the article.  It turned out that the detour was more enjoyable!

See Also:

The Pragmatarian Model For The Economist
The Pragmatarian Model For Inkl

Sunday, December 18, 2016

Clarifying The Invisible Hand

My response to: The Myth of the Invisible Hand by Jonathan Kolber

I love stories about the Invisible Hand (IH). It’s plain to see that you’ve definitely done quite a bit of homework on the topic. In fact, I even learned something!

However, despite all the homework that you’ve done, you haven’t quite grasped the essence of the IH. Here’s the most relevant passage…

It is thus that the private interests and passions of individuals naturally dispose them to turn their stocks towards the employments which in ordinary cases are most advantageous to the society. But if from this natural preference they should turn too much of it towards those employments, the fall of profit in them and the rise of it in all others immediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests and passions of men naturally lead them to divide and distribute the stock of every society among all the different employments carried on in it as nearly as possible in the proportion which is most agreeable to the interest of the whole society. — Adam Smith, Wealth of Nations 

Clearly this passage doesn’t include the term “Invisible Hand”. But that’s exactly what this passage is all about.

Accountants, for example, are certainly “advantageous to society”. So it’s profitable to become an accountant. But if too many people become accountants… then the supply of accountants will be greater than the demand for accountants… which means that it will become less profitable to become an accountant… and less people will become accountants. Instead, they will go into more profitable professions.

High profits are a green light. Low profits are a red light. The greater the disparity between profits… the greater the incentive for faulty distributions to be automatically altered.

We all subjectively perceive shortages and surpluses and we spend our money accordingly. We influence each other and are simultaneously influenced by each other. We direct each other and are simultaneously directed by each other. We encourage beneficial behavior and are simultaneously encouraged to behave beneficially.

Therefore… no need for government intervention/interference? Well… not quite. Even though Samuelson was an idiot who clearly didn’t grasp the IH… he did grasp that the free-rider problem was a problem.

Like I said, I love stories about the IH. In other words, I subjectively perceive that there’s a shortage of stories about the IH. However, I have never even once spent even a penny on any stories about the IH.

valuation = my perception of the relative scarcity of IH stories
sacrifice = the amount of money that I’ve spent on IH stories

valuation > sacrifice

I truly want there to be more stories about the IH… but, by not spending any money on stories about the IH… I fail to provide any real incentive for people to write stories about the IH. In other words, I basically shoot myself in the foot by essentially lying to producers. Producers really aren’t mind-readers.

The solution is the pragmatarian model. Each month we’d each pay $1 dollar… but we’d be free to choose which stories we spend our pennies on. For sure I’d spend my pennies on stories about the IH. The more people who did so… the greater the incentive for people to write stories about the IH. The greener the light… the brighter the value signal… the sooner there would be an abundance of stories about the IH. The feedback loop would be accurate.

And if too many people started writing stories about the IH? Well… this is definitely hard for me to imagine! But I suppose it’s theoretically possible. If it did happen though then the light for stories about the IH would turn from green to yellow to red and the faulty distribution of topics would be automatically corrected without any intervention of law.

Incentives matter just as much for public goods as they do for private goods…

Public services are never better performed than when their reward comes only in consequence of their being performed, and is proportioned to the diligence employed in performing them. — Adam Smith, Wealth of Nations

So no, the IH really isn’t a myth. Values are subjective. Nobody is a mind-reader. Incentives matter.

Please let me know if you have any questions! It’s entirely possible that my interpretation/understanding/grasp of the IH is faulty. As the saying goes… two heads are better than one…

More heads are occupied in inventing the most proper machinery for executing the work of each, and it is, therefore, more likely to be invented. — Adam Smith, Wealth of Nations


Sunday, December 11, 2016

The private sector drops the ball?

My reply towhen the private sector drops the ball

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The private sector drops the ball? There you are watching that one commercial with Sarah McLachlan and the abused dogs. And then, of course, you start tearing up and going *snif* *snif*. But do you call the number on the screen in order to make a donation? Nope. You drop the ball.

No worries! That’s what the government is there for! The government reaches into your purse, takes out $100 dollars… and gives it to ASPCA. Voila!

You dropped the ball but the government picked it up. That’s teamwork!

Actually… it’s not quite so simple to figure out who, exactly, dropped the ball. It’s easy to blame the education system for not teaching you about Wicksell…

It is impossible for anyone, even if he be a statesman of genius, to weigh the whole community’s utility and sacrifice against each other. — Knut Wicksell, A New Principle of Just Taxation

But can we really blame the education system? The education system is simply the product of our system of public finance.

Eh, it’s easiest just to blame myself. I dropped the ball. Sorry about that. But here am I endeavoring to pick it up.

So… if we assume that the $100 dollars that the government took out of your purse closely corresponds with how much you genuinely care about helping abused dogs… then yeah… there’s absolutely no problem with the government picking up the ball. However, this assumption would throw markets under the bus. Not just a little under the bus… but entirely under the bus.

There would be absolutely no point in anybody shopping if we want to assume that the government knows how much we truly value things.

And then you ask… but what about voting?! Well… if voting every few years was truly effective at communicating/conveying our valuation of things then again… markets get thrown entirely under the bus.

Therefore… what?

Therefore we apply the pragmatarian model to Medium. Each month we each pay $1 dollar… but we are given the freedom to choose which stories we spend our pennies on. So if you read a story about helping abused dogs and you start going *snif* *snif*… then you might as well spend some of your pennies on the story. The more pennies that get spent on that story… the more attention that will be given to the plight of abused dogs.

And if you don’t decide to spend your pennies on the story about helping abused dogs… then it’s a given that you’re saving your pennies up for more valuable stories. But you’re definitely not going to be spending your saved pennies at Sephora! You’ll only be able to spend them on stories that you truly value. Then I’ll be able to sort your recommended stories by your valuation of them. How cool would that be? It would only take me a second to learn which story you value most.

If we’re honest with ourselves then sure, the free-rider problem is a real problem. But assuming that government officials, who we’ve never even met, somehow know how much we truly care about things? Oh man, it’s by far the most ridiculous, and harmful, assumption ever made.

To be clear… no, I’m really not a libertarian. I’m a pragmatarian. I believe that taxes are wonderful and necessary… as long as the people who pay them are given the freedom to use them to improve our country. Of course what counts as “improvement” is entirely subjective. If it wasn’t subjective… then again, shopping would be thrown under the bus.

Building Better Classrooms And Countries

Forum reply: 4th Grade Nation State

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You know I actually did something like this (in the loosest sense of the term) in sixth grade when I was 11. My teacher would give us fake money when we did things like help out other students, assist the classroom chores, and of course do well on money assignments (extra credit that we got paid for instead of points for). Afterwards we could spend the money in the store of knickknacks etc. There were other lessons associated with it such as checkbook balancing and loan management, but that wasn't the main goal. The goal was to demonstrate to the students how a simple market works, a person's place in it, and how to manage your money.

Did we create an independent economy between students? No, but that was never was the goal. Did we waste our parents money or try to cheat the system? No, there was no point in doing that. But what we did do was create a simple market where the classroom employed and paid students for doing jobs for the classroom and the students purchased things from the classroom. Would you consider that "building" something? - Lost heros 

What your teacher did was better than nothing. But would I consider it "building" something? Not so much.

Why do you perceive that the citizens of Classtopia are wasting their parents' money? You said that the students in your class purchased things "from" their classroom. But in Classtopia... the students are purchasing things "for" their classroom. Well... so far only labor has been purchased... but when the Garden Dept, for example, buys a plant... then it's going to be "for" their classroom... and/or the school. It's the difference between private goods and public goods.

Yesterday Michelle came over and picked up my collection of unused postcards and foreign currency. This week each of her 30 students will receive 22 foreign coins, around 4 foreign bills and around a dozen postcards. I put the items in 60 zip lock bags.

Of course the students are going to be given the opportunity to trade with each other. Not just trade though... but also buy, sell and share.

From my perspective, a market is obviously beneficial because the students aren't going to equally value their Christmas gifts. Some students might prefer the postcards while others might prefer the currency. Maybe most students will prefer the currency?

Michelle is going to ask the students what they can trade their gifts for. I'm hoping that one of the students will respond with "quotes". Then hopefully... while they are trading quotes for currency/postcards... they'll realize that they can trade copies of their quotes with each other.

When Michelle and I talked yesterday she guessed that perhaps the issue is that the kids have been indoctrinated against trading. Kids are known for making really bad trades... so their parents and teachers admonish them against making any trades. Sure, lots of kids don't know the real-world value of most things. When the kids are trading/buying/selling the postcards and coins... they aren't going to know their real-world value. Well... to be clear... I don't really know their real-world value. Except for the French Francs and the 100 yuan bills. Michelle told me that the Francs are obsolete but I wanted to know whether the metal itself had any value. I kinda gave up after a few searches. As far as the 100 yuan bill... I believe it's worth around $14 dollars. There were at least a couple of them in the collection.

Anybody who exchanges a 100 yuan bill for a Franc will probably be making a mistake. And I say "probably" because I can't know how much the student might value the coin itself.

Over Christmas break the students with the currency will have the project of using Google Sheets to inventory their collection. One of the columns will be for the currency's dollar value. So the students will need to do some research.

Generally it's a good idea to figure out something's market value before you decide to trade it. But I'm pretty sure that it's a good idea to allow the kids to make some bad trades in order to learn from their relatively small mistakes.

Building a better classroom means that you're making improvements that can benefit the next batch of students. If this year's Garden Dept buys a Tillandsia ionantha and attaches it to a tree in the school... then it can benefit the next batch of kids. Same thing if the Book Dept buys A Wrinkle in Time and adds it to the classroom library.

Sure... improvements can be made just by the students contributing their time... but that's certainly not how most countries work. Most countries have taxes. Of course, there aren't any countries that allow their citizens to choose where their taxes go. Nearly everybody takes our current system for granted. But I certainly do not. I've thoroughly researched our system and have found absolutely no logical/rational (ie economic) explanation for allowing a small group of people to spend everybody's taxes.

So... Classtopia. You have 30 citizens each using their pennies to say, "I've found some room for improvement and my penny is proof that the improvement should be made".

Can America learn anything from Classtopia? Imagine citizens using their dollars to say, "I've found some room for improvement and my tax dollar is proof that the improvement should be made".

Well...

A. Americans don't truly know where there's room for improvement

Or...

B. Voting is an adequate method for Americans to communicate where improvement is most needed

I'm pretty sure that neither of those is the right answer. Ideally, sooner rather than later, some of you will apply America's current system to some classrooms. The 30 students will elect one student who gets to decide how all their tax pennies are spent. And then we'll see! We'll see which system is better at improving classrooms. We'll see which system is better at building more beneficial classrooms.

Friday, December 9, 2016

Classtopia Book Valuations

Which children's books are the most valuable?  The only real way to find out is to facilitate crowd sponsored results (CSR).  When the citizens of Classtopia give their taxes to their Book Dept... they will be able to use their tax pennies to communicate their valuations of their favorite books.

Here's the list as of 6 Dec 2016...




This is a very new project so nearly all the books/valuations were submitted by Michelle and myself.  We ended up giving around $13 dollars to the Book Dept.  So far only one student, Laila, has contributed to this list.  I believe she put 20 pennies on Charlotte's Web.

How will this list evolve over time?  It will be very fascinating to find out!  I will be using this blog entry to share updates.






Thursday, November 17, 2016

Efficiently Allocating Brainpower

Response to: Craigslist, Wikipedia, and the Abundance Economy by Quincy Larson

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Your grasp of programming is a LOT better than your grasp of economics! I’m the opposite. My grasp of economics is a LOT better than my grasp of programming. It’s a double coincidence of wants!

Imagine that an ant stumbles upon a giant, delicious cookie. The ant will certainly be thrilled that she made such a valuable discovery. Of course she can’t carry the entire cookie back to the colony. Instead, she willingly spends/sacrifices a considerable amount of her limited and precious calories in order to create a very strong pheromone trail all the way back to the colony. Ants at the colony will be able to easily and quickly discern that, based on the strength of her pheromone trail, it will be really worth it for them to choose her trail. Many of them will do so and the chances will be really good that they will be able to grab the cookie before a crow does.

I don’t even know if crows eat cookies.

The problem with your grasp of economics is that you see spending/sacrificing as buying.

NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO.

The point of spending/sacrificing is communicating. It’s how we communicate to others where there’s something of value. It’s how we bring valuable/important things to other people’s attention. It’s how we beneficially alter/change/modify each other’s behavior.

The gold rush was only a rush because so many people were willing to spend so much of their money on gold. Consumers’ willingness to pay such a high price for gold quickly and significantly altered the behavior of many producers.

So imagine society as a bunch of brains. What should be done with all these brains? How should they be used? How should they be allocated?

The gold rush significantly altered the allocation of society’s brains. Consumers said, “We’d truly LOVE to have more gold! We’ve proved this by our willingness to spend/sacrifice so much money!” Producers got the message loud and clear… and there was a significant change in the allocation of society’s brains. A lot more brainpower was used to try and solve the gold shortage problem.

Dr. Salk gave the polio vaccine away. That’s true. People paid barely any money for the vaccine. That’s also true. Everyone’s life is better off as a direct result of this massive free lunch? Nope. Nope. Nope.

If the amount of money that people spent on the vaccine accurately communicated their true valuation of the vaccine… then we can reasonably guess that there would have been a massive rush to cure other deadly diseases. And cancer would have been cured a long time ago.

Well… I can’t know what, exactly, would have been the result of allocating a massive amount of brainpower to curing deadly diseases.

It’s easy to see what does exist… it’s really hard to see what would have existed if people truly understood the free-rider problem (sacrifice < valuation).

I’m guessing that you aren’t aware that Wikipedia is loosely based on Friedrich Hayek’s essay? Sure, of course knowledge is dispersed… but the “minor” detail that Wales missed is the relationship between knowledge and prices. Wikipedia has a lot of brainpower. But this brainpower really isn’t being efficiently allocated because the editors really don’t know how much their edits are truly worth to other people.

The solution is simple. Let’s take Medium for example. We’d all pay a very reasonable $1/month but we’d be entirely free to choose which stories we spend our pennies on. People’s sacrifices would accurately communicate their valuations and Medium’s brainpower would be efficiently allocated.

This solution is the pragmatarian model. The Nobel economist James Buchanan deserves most of the credit for this model.

With your grasp of programming and my grasp of economics we can create something awesome. Let me know if you’re interested!

Wednesday, November 16, 2016

Classtopia Tax Choice

Reply to thread: 4th Grade Nation State

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This last Monday the students in Michelle's class paid their taxes for the first time...




The amounts are in pennies!

Of course the taxpayers were able to choose where their taxes went.  The taxpayers gave their taxes directly to the students in charge of the departments.  When the taxpayers paid their taxes, they were given a receipt.

The point of the IRS isn't to collect taxes... it's to try and minimize cheating.

All the taxes were generated from the auction of the quotes.  So perhaps they aren't technically taxes?  *shrug*


[Updates]

17 Nov 2016




29 Nov 2016






5 Nov 2016






8 Dec 2016






9 Dec 2016






12 Dec 2016