Newsflash: You Should Be Happy!!!

Matt Ridley has written an entertaining book: The Rational Optimist, detailing all the ways in which life is great for rich people. (By rich people I mean the fraction of humans who make ≥5 figure salaries in $.)

For example Louis XIV had a hundred chefs make him 100 meals and throw away the 99 he didn’t want, but nowadays a New York City “peasant” has even more choice of dinner consumption, without needing to be king. (I’m not sure if this applies to the poorest person in NYC or the poor ones who can’t make it in … which is why I’m restricting the statement to ≥$10000 earners. Although maybe Mr Ridley would argue that even a subsistence farmer today has it better than Les Hommes de Cro-Magnon.)

But so, uh, why is this an interesting book? Nobody writes a book called Hey, did you know the sky is blue? Except at sunset when it’s pink or when it rains it’s grey. Isn’t that interesting?! Because everybody already knows that. The fact that Mr Ridley can sell a “provocative” book full of amazing facts and viewpoints about how prosperous we are sends a grave message the opposite way.

Why is it that we need a book from Mr Ridley to remind us how good we’ve got it?

Calculus is topology.

The reason is that the matrix of the exterior derivative is equivalent to the transpose of the matrix of the boundary operator. That fact has been known for some time, but its practical consequences have only been understood recently.

[S]uppose you know the boundary of each k-cell in a cell complex in terms of (k−1)-cells, i.e., the boundary operator. Then you also know the exterior derivative of all discrete differential forms (i.e., cochains). So, you know calculus. Smooth or discrete.

Peter Saveliev

David Hale laying out the basic facts, in one minute each, on:

1. US housing demand
2. developing-country demand for automobiles
3. volatility in agricultural prices

Did you know?

• Americans burn down 400,000 houses every year.
• $7 trillion wealth loss for Americans from house price declines.

(Source: http://admin.brightcove.com/)

http://c.brightcove.com/services/viewer/federated_f9?isVid=1

• Africans drink 7 litres of commercial beer per year.
• Chinese drink 35 litres of commercial beer per year.
• Americans drink 70+ litres of commercial beer per year.

(minute 7)

From my own little corner of the Earth, it looks like home-brewed beer is growing in appeal—as are micro-brews and wines & ciders made from fruits with a little more natural variation.

So it’s interesting that—just when my crowd is being led by Pied Piper Pollan away from Corporate Consistency-topia into the Land of Natural Individual Variation—those climbing up the Ladder of Disposable Income might drift the opposite direction.

I was going to try to make an alluring mathematical comment on this story, but I’m out of steam. Here are the mathematical concepts involved in this story:

• “direction” — implies ∃ beer space, ∋ beer vectors
• this is a perceptual space — what are the dimensions? Is it linear?
• how would you mathematically model variable-versus-consistent beer tastes?

  Maybe as a contour plot / heatmap of confidence intervals? Or a Schwartz distribution?

  I wouldn’t assume that the variation is Gaussian. Whatever the taste / smell space looks like, a lot of the variation in homebrewing is due to creativity (discontinuous leaps to elsewhere in the space) — not just to production “errors” (which might in fact be normal).

PS Tusker Beer rules.

length of time spent jobless in various American recessions

via the Economic Policy Institute

Relatedly, here’s Alan Krueger & Andreas Mueller on reservation wages:

This paper presents findings from a survey of 6,025 unemployed workers who were interviewed every week for up to 24 weeks in the fall of 2009 and spring of 2010. Our main findings are: (1) the amount of time devoted to job search declines sharply over the spell of unemployment; (2) the self-reported reservation wage predicts whether a job offer is accepted or rejected; (3) the reservation wage is remarkably stable over the course of unemployment for most workers, with the notable exception of workers who are over age 50 and those who had nontrivial savings at the start of the study; (4) many workers who seek full-time work will accept a part-time job that offers a wage below their reservation wage; and (5) the amount of time devoted to job search and the reservation wage help predict early exits from Unemployment Insurance (UI).

via @tylercowen

(Source: http://www.epi.org/publication/remembering-bad/)

[I]n the late 1920’s and early 1930’s…. There were lots of deep thoughts [in economics], but a lack of quantitative results. … It is usually not of very great practical or even scientific interest to know whether the [causal] influence [of some factor] is positive or negative, if one does not know anything about the strength.

But much worse is the situation when an [outcome] is determined by many different factors at the same time, some factors working in one direction, others in the opposite directions. One could write long papers about so-called tendencies explaining how this … might work…. But what is the … total net effect of all the factors? This question cannot be answered without measures of … strength….

Trygve Haavelmo

Bank of Sweden pseudo-Dynamite Prize Laureate 1989, for work in econometrics

The ratio of US jobseekers to US jobs stands at 4:1.
via John Irons (of argmax.com fame)

The jobs-to-seekers ratio rises immediately during a recession, but does not decrease as quickly after the recession ends. (Is this true in general?)

The 2011 jobs-to-seekers ratio, broken down by sector.

(Source: http://www.epi.org/publication/11-telling-charts-about-2011-economy/)

The last decade’s debt record for several rich countries.

3-month Bond Yields owed by some of them:      (SOURCE: Bloomberg)

Japan   .10%
UK      .41%
Germany .28%
US      .04%

And here’s one of the yield curves (US’):

 

(Remember, higher yield means the debt costs more to service for the country that’s borrowing.)

(Source: http://www.economist.com/node/21543139)

[T]he question of what “really” exists pervades the sciences and human thought in general.

The belief that the infinite does not really exist goes back at least to Aristotle. Parrnenides even questioned the reality of plurality and change. (Einstein’s vision has much in common with Parmenides). Towards the end of the nineteenth century an acrimonious exchange took place between Kronecker and Cantor regarding the reality of the actual (as opposed to potential) infinite. Kronecker claimed that only the finite integers really exist and all else is merely the work of man.

Cantor countered that the essence of mathematics was its freedom and that he had attained a larger vision than Kronecker had who could not see the infinite. Most mathematicians have followed Cantor and found his paradise a more beautiful and alluring universe.

…. But this seeing is not explained by modus ponens. In his beautiful book Proofs and Refutations, Lakatos (1976) has shown that the mathematical process itself is dialectical and not Euclidean. At all times our ideas are formally inconsistent. But inconsistency, while still recognized as a pathology, is no longer seen to be a fatal disease. If we come across a contradiction, we localize it, isolate it, and try to cure it. But we have to get over our neurotic phobias concerning this disease and recognize it as inseparable from life itself.

David A Edwards

In the 1930s, almost 10 percent of [American] Christmas spending was financed with money squirreled away into Christmas clubs—bank accounts … helping consumers save for the holiday. Participants promised to contribute weekly, frequently as little as $0.25 at a time. …

Since 1970, by contrast, the explosive growth in consumer credit has had the opposite effect, helping consumers fall prey to their lack of self-control when it comes to borrowing. In recent years, one-third of [American] holiday spending is still not paid off two months after Christmas.

Joel Waldfogel