College and Cakes

It was graduation day at UChicago yesterday. Congratulations to everyone who graduated.

Should College Be Subsidized? 

On a related note, Tony (now officially Dr. J. Anthony Cookson) and Xan and Tony again have been getting in on the discussion about Is College Worth It? I want to say a quick about a related issue: Should college be subsidized? There are a lot of theories about college, and in my recent post Cakes, A Parable, I was hoping to illustrate three simplified ideas about college and subsidies.

1. If benefits of education are private (that is, accrue entirely to the individual getting the education, say through vocational training or consumption), then education should not be subsidized.
2. If college is just a costly signal, then education should not be subsidized.
3. If education provides positive externalities (benefits to people other than the individual getting the education not reflected in market prices), then it should be subsidized. 

The Point

There are other theories of college, too, but the point I want to emphasize is this: college can be a very, very good thing, but being a very, very good thing is not enough to warrant a government subsidy. For that, it has to be a good thing for other people in a way that will not be captured by pricing in the market.

So if you think there are large public benefits from college that are not internalized by the student, such as lower crime levels, improved and informed participation in democracy, or just overall better values, then maybe* it should be subsidized. If you think the benefits are mostly private, even if they are large, it should not be subsidized.

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* I say "maybe" because if better values are the main positive externality of college, then isn't college kind of like church in the respect that matters for subsidization? Kind of makes you think twice, doesn't it?

Civility: Scoffed at, by Paul Krugman

Tony initiated a good discussion with me, Xan, and Kevin via e-mail on civility in response to this column by Paul Krugman, and I thought I'd post my thoughts that I shared with them, and expand a bit on them.
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I am saddened by where Krugman decided to end the column:

But bad-faith arguments don’t deserve a civil response, and if the attempt to be civil gets in the way of exposing the bad faith, civility itself becomes part of the problem.

I do agree with Krugman's initial claim that one can deduce someone isn't likely honestly discussing something (though his blue sky, green sky example is a little bizarre).

The question then becomes what you do about it. There are two options: disengage discussion or continue civilly. Disengaging may in fact be (morally) wrong if the issue is important enough, so sometimes one must civilly continue. I disagree entirely with Krugman's conclusion that civility itself can be part of the problem. It can never get in the way of exposing the "bad faith" -- almost by definition.

Referring to some of the points I summarized about Civility, Paul could benefit from reflecting on points 1, 5, 6, 7, 8, and especially 10).

In contrast to Paul's claim that civility is part of the problem in politics, I would argue that civility is most important in politics where arguments are had between people with fundamentally different core beliefs and values -- even if one of those people doesn't even value civility. By not even acknowledging the possibility that we may be wrong, smearing them because we don't like or agree with them, and attacking rather than civilly criticizing them, we close our minds and open ourselves to the possibility of making major blunders.

In fact, it looks like Paul committed a pretty major blunder supporting some uncivil behavior by a Senator the day before the column cited above. (Though I link to Landsburg, he is not the epitome of civility by a long-shot, either. It's almost ironic, actually.)

This is a downside of the internet. For some reason, it is much easier to become uncivil when interacting with people or writing on the internet than in other forms of communication. I have not quite figured out why, but I find myself falling prey to the lure of incivility much more often than any other form of communication. Is it anonymity? Lack of nuance through limited characters in text communication? Cross-cultural clashes happen more often? I don't really know.

But it's a problem that shouldn't be contributed to by Nobel Prize-winning economists in such a public forum as the New York Times.

UPDATE: Related Dilbert cartoon. 

Civility, by Stephen Carter

Stephen Carter, a law professor at Yale, wrote two great books that I very much enjoyed reading as an undergraduate and still refer to today: Integrity and Civility. I still own Integrity, but I only kept my notes on Civility (being a follow-up, content could more easily be summarized in bullets). Carter comes from a general Christian perspective, but as one Amazon reviewer said, "Where he doesn't seem to understand more secular thinking, he certainly acknowledges it and deals with it very . . . well . . . civilly."

Here are the main points of Civility, which are worthy of reflection. While I won't do a point by point commentary in this case, like what Xan has excellently done with Influence, I'll post some things related to some of these ideas in the future.

1. Our duty to be civil towards others does not depend on whether we like them or not.
2. Civility requires that we sacrifice for strangers, not just for people we happen to know.
3. Civility has 2 parts: generosity, even when it is costly, and trust, even when there is risk. 
4. Civility requires a commitment to live a common moral life, so we should try to follow the norms of the community if the norms are not actually immoral. 
5. We must come into the presence of our fellow human beings with a sense of awe and gratitude.
6. Civility assumes that we will disagree; it requires us not to mask our differences but to resolve them respectfully.
7. Civility requires that we listen to others with the knowledge of the possibility that they are right and we are wrong. 
8. Civility requires that we express ourselves in ways that demonstrate respect for others.
9. Civility requires resistance to the dominance of social life by the values of the marketplace. Thus, the basic principles of civility should apply as fully in the market and politics as in every other activity.
10. Civility allows criticism of others, and sometimes requires it, but the criticism should always be civil. 
11. Civility discourages the use of legislation rather than conversation to settle disputes, except as a last, carefully considered resort. 
12. Teaching civility, by word and example, is an obligation of the family. The state must not interfere with the family's effort to create a coherent moral universe for its children.
13. Civility values diversity, disagreement, and the possibility of resistance, and therefore the state must not use education to try to standardize our children. Religions do their greatest service to civility when they preach not only love of neighbor, but resistance to wrong. 

Cakes, A Parable

The Baker's Cakes

The town's baker was just getting by. People liked the cakes he baked well enough, but every time a couple came back from visiting the city, they raved at how great the cakes were. "Sometimes we go to the city just for the cakes!" said one lady to her friend a little too loudly.

The town's baker wanted to be better. He took out a loan, and studied at the city's culinary school. He learned to bake better cakes, and when he came back to town, the people exclaimed, "These cakes are great!" and bought them for birthdays, weddings, graduations, and dinner parties. The baker even got regulars coming in for his cupcakes nearly every day! His business improved, people were happier, and the baker easily paid off his loans and no longer had to worry about his bills. Maybe he would even retire early!

Everyone lived happily every after, until...

The Baker's Rival

The baker was jealous. A French Pastry Chef had moved into town just down the street. The Pastry Chef made world-class cakes. The town baker just couldn't compete in quality. And to add insult to injury, the Pastry Chef put these fancy French decorations on the cake that just screamed "I'm French, and I know how to bake the best cakes in the world!" The locals loved him, and while the town baker was still doing well, the French Pastry Chef was doing spectacularly well.

The city folks were driving into town just to taste the Pastry Chef's cakes! "Be sure to buy from the baker with the fancy French decorations on the cake -- they're the best in the world!" they would tell their friends when they got back to the city.

Well, two can play at that game, thought the town baker. Those fancy French decorations weren't all that expensive, so he began to buy them and put them on his cakes, too. Now some city folks would buy his cakes over the French Pastry Chef's cakes. It worked. The city folk were confused, and the Pastry Chef lost some of his business.

"That Imitator is stealing my business!" said the Pastry Chef. "I'll just put expensive, French-imported decorations on my cake, now." And he did. The town baker couldn't buy them and put them on his cakes, too. He was doing well, but not THAT well; he just couldn't justify the cost, even considering the business he stole.

The customers didn't like the expensive decorations any better than the old ones -- which they didn't like better than no decorations at all. They only cared about tasty cake.

Now everyone was worse off. The town baker's and the Pastry Chef's costs went up to pay for decorations customers don't care about. Customers had to pay higher costs that were partially passed onto them by the bakers. And people could tell the two apart just as well as they could before the decoration arm's race began.

Everyone lived less happily ever after, until...

The Baker's Problem

The town was on a health kick. Sales of cakes were way down for both the town baker and the French Pastry Chef. In fact, things got so bad, the town baker had to close up shop. I guess it is an early retirement, after all, he thought.

After he closed up shop, the townspeople were sad. There were no more lovely smells of freshly baked cakes wafting from the bakery anymore. Even though they didn't eat as many cakes as they used to, they still loved the smell of cakes. "Why don't we pitch in a little bit each and pay the baker to bake more cakes? We don't have to buy them, just smell them?" they told each other. It was a great idea. If everyone pitched in a little, the baker could bake more cakes, the townspeople could smell the cakes baking, and the townspeople and the bakers would be better off.

The day of the collection came and went. No one donated any money to the baker. "Why should I donate when everyone else is, too?" thought one selfish man. "The cakes would still be baked if everyone else donates, I would get to smell their beautiful aroma, and I would get to keep my money!" Of course, that thought was not thought by just one selfish man, but by every man and woman in town. No one donated, and everyone was sad.

To solve the problem of the missing cake aroma, the town council convened and passed a unanimous resolution to fund the baking of cakes. Everyone voted in favor of its passage, and the townspeople were happy there would be more cakes to smell again for just a small increase in taxes. The baker was happy. He could still be in business thanks to town's subsidy. The Pastry Chef was happy, too. He didn't go out of business, but with the subsidy for cake baking, he could bake more cakes, as well.

"Thanks to the good government of the town council, I don't have to retire too early!" the baker told the town at the signing ceremony. "I guess the town can have their cake, and smell it, too!"

Everyone lived happily ever after.

The End?

Questionable Studies

Academic publication is a dialog, and bad science happens for a lot of different reasons, but it seems like this month, certain papers with problems have become unusually popularized (e.g. given full articles in the WSJ and other newspapers).

Reinhart and Rogoff ask: How does debt relate to growth?

This is an important question, and the way they framed their results (implying a debt/GDP cutoff where growth becomes hampered), got a lot of press when published 3 years ago and was cited as the basis of a lot of austerity measures. Sadly, there are mistakes. In particular, there was an Excel coding error. The authors have also been accused of selectively omitting, or cherry picking, their data, and implying that debt causes slow growth when the causation could easily go the other way, that is, making a correlation implies causation error.

In their response to the criticism, R&R admit the Excel error and strongly deny the cherry picking and causation error. To be fair, it was more of the press and interested governmental parties that were more than happy to claim this paper proved a causation.

Here's a "scorecard" of the saga with a description of how the results change, links to the original paper, the criticism, the response, and other relevant things. Note that it seems like the error may have been pointed out in a way to maximize press coverage and that R&R is just one of the many papers on the debt/growth question.

It's not just macroeconomics, biology has some issues, too.

Sharov and Gordon claim: Life on Earth originated "elsewhere." 

I am just glad this paper is on arxiv and hasn't been picked up yet by a journal (I don't think).  Here's figure 1:

Here's a great description of the ridiculousness of it. The WSJ correctly pointed out they use only 5 data points -- a severe lack of data that bests even macro papers. However, as Myers points out, they also cherry pick those data points, and abuse extrapolation.

What's My Password, Again?

Spring cleaning doesn't stop with my apartment. After I clean the physical world, I clean up my digital world, too. And that means, in part, new passwords for my critical accounts. I pick several strong* passwords and make sure (user name, password) pairs are different for all my important accounts.

But, boy, is it ever a hassle.

What's Your Favorite Color?

Even if I had completely random strings for passwords for every single account that I changed every month instead of every year, I still wouldn't feel totally safe. Why? I don't believe that sites secured with passwords are actually secure if they ask basic security questions to "recover" your account in the event you forget your password. Then your account is only as secure as your mother's maiden name and favorite color. And given the amount of publicly available information and stuff people post about themselves on Facebook, that means the account isn't really secure at all. With a little guessing, anyone could answer those questions! To solve this problem I try to do two things:
1) Write my own security question.
2) If I can't write my own security question, I make up a ridiculous or completely unrelated answer to the posed question. Q: "What's your favorite color?" A: "Live long and prosper."

You get the idea. Sure, I may forget my password and also the answers to the security questions, but really, if there isn't a chance that you can lock yourself out of an account permanently, then is the account really secured at all?

Think I'm paranoid? The NSA actually recommends this (see page 6):

To prevent an attacker from leveraging personal information about yourself to answer challenge questions, consider providing a false answer to a fact-based question, assuming the response is unique and memorable.

While I am on board with good password management, and do other things like encrypt my home wireless signal, use anti-virus software and firewalls, and am careful about which websites I visit, I still don't follow all the best practices.

Why? Because, man, is it ever a pain.

What's the Worst that Could Happen?

This is the question computer scientists usually ask, and sometimes it's a question worth pondering.

Here's an account of a Wired editor being hacked and all his data deleted, just because the hackers were attracted to his three letter Twitter handle.

How can you prevent this? You can't, 100%. But following the best practices linked to above gets you a lot of the way there. Here's Lifehacker on undertaking those costly security measures: have good password security, utilize two-device verification, and regularly maintain good backups. 

Actually, you should have a backup system no matter what because digital devices have a high failure rate even without the help of hackers. I think the half life of a hard drive is only on the order of 5 years. And remember the golden rule of backups: If your data isn't in at least two places at the same time, then it's not backed up.

But ultimately, you have to weigh the costs and benefits yourself about what level of security is worth having on line and off and how much and how often to backup and secure digital and physical files. The benefits of security is high, but so are the costs.

What's Likely to Happen? Is all This Security Stuff Worth It?

Microsoft published a good article on this topic a few years ago. If you want to know about common attacks on passwords, details about phishing and the total uselessness of "certificates" read the article.

The main result: "Most security advice simply offers a poor cost-benefit tradeoff to users and is rejected."

They are trying to get across the idea that worst case harm is not the same as expected harm. Really bad things can happen to you online, but they usually don't, so when users ignore security advice, they do it not because they are lazy, but because, boy, is it ever costly. But getting hacked and losing your data is a pain, too, so the question is really, Is it worth it to you?

Who's the Fattest of Them All?

Answer this: Which region of the country has the highest obesity rate?

You said the South? I did, too. And we are wrong. Southerners self-report the highest obesity rate, but when actually weighed and measured by researchers, the West North Central region is most obese, and the East South Central region ranked fifth (out of nine) most obese! What's going on? In phone surveys, Southerners lied less than other people about their weight.

It's no surprise that lying is a very real concern on surveys, especially about sensitive issues like weight, even when the survey is anonymous. In fact, the article notes previous research has found that women under-report their weight more then men, and men over-report their height more than women, and in other cases, researchers have found people over-report how much they give to charity, state they're registered to vote when they are not, and underestimate how much they drink, among other things. What IS surprising is the fact that there is a regional component to the amount of lying.

Mark Twain said, "There are three kinds of lies: lies, damned lies, and statistics."  Normally, people sympathize with this quotation when facts are presented in misleading ways* using poorly done statistics or when numbers are cherry-picked to support only one side of a position, but the truth is even worse: Even good statistics is done on the lies that make up the survey responses themselves!

(weight research HT: MR)

* An oldie but a goodie on this topic is the book How to Lie with Statistics by Darrell Huff.