No, Obama did not nullify Hobby Lobby decision

Last year, the Supreme Court declared their decision on Burwell vs Hobby Lobby, ruling that the Affordable Care Act (ACA, also known as Obamacare) cannot force religious for-profit organizations to pay for birth control for their employees if they have a religious objection.

This year, a few news sources are reporting that Obama rendered the Hobby Lobby decision obsolete.  Basically, if a religious organization has a religious objection to paying for birth control, then the health insurance provider must provide birth control coverage at no charge.

But it would be wrong to say that this nullifies the Supreme Court decision.  Rather, Obama is implementing the decision.

Here are some facts:

1. ACA, as written, already had the same policy for religious non-profits.  That is, if they had a religious objection to paying for birth control, then the insurance provider must provide birth control coverage at no charge.
2. The rationale behind the Hobby Lobby decision is that if the ACA does it for religious non-profits, then it can (and must) do the same for religious for-profits.  And now Obama has made it so.

When I covered the Hobby Lobby decision in detail last year, I noted that a lot of people were panicking about it, and didn't seem to understand what it actually said.  Now that Obama is implementing the decision, many people are relieved that it's not as bad as they thought.  This is one of the dangers of panicking: people are satisfied with less once they realize that things are not quite as terrible as they initially thought.

There was never any danger of female employees losing access to birth control coverage.  The danger is that it makes religious rights too expansive.  Can religious employers discriminate merely because their religious beliefs tell them to?  The Hobby Lobby decision doesn't outright say that they can, but it sets a poor precedent.

I also worry about perverse incentives.  Why should organizations with particular religious beliefs have to pay less for health insurance?  I do not want to financially incentivize those beliefs, and it is simply unfair.

Though there is a lot of focus on the Hobby Lobby decision, I find the decision itself hard to argue with.  I think the real problem is in the original ACA policy, as written by the legislators.  Religious organizations should not have a right to discriminate, and the ones that do should not have their operating costs subsidized.

Even if capitalism has problems, consumerism is fine

I've heard a few people complain about "consumerism", identifying it as one of the evil consequences of capitalism.  For example of this mentality, see here:

People in consumerist societies live by the influence of advertisements, and often methodically buy things they do not need, and in most cases, cannot afford. This, in turn, leads to greater economic disparity, and despite having the most or latest products, consumerists have a feeling of unfulfillment due to spending a lot of money yet having nothing of personal importance.

Even as I agree that capitalism has some problems, I do not agree that consumerism is one of those problems.  Furthermore, consumerism mitigates economic inequality, rather than exacerbating it.

My problems with capitalism are summarized as follows:

1. Whenever returns on capital exceed economic growth (which is the typical state of the economy), capitalism leads to increasing economic inequality.  That's the thesis of Capital in the 21st Century, one of the most important books of our time.

2. As I've previously observed, even an ideal free market only optimizes for the sum utility as measured in dollars.  In the presence of economic inequality, this skews the market against poor people, who have a lower dollar-to-utility conversion factor.

My understanding is that "economic growth" is a measure of the rate of increase of consumption.  So if people consume more, that will lead to less inequality.  This is easy to understand if you consider the alternative to consumption: investment.  Investing money produces returns, and the people with the most wealth are the people who get the most returns.

It is true that I've previously expressed a desire to consume less.  However, that's partly a matter of personal taste, and it's partly a matter of labor politics.  I advocate reducing the 40 hour work week because I would rather consume my leisure time than have an increased ability to buy status goods.  In other words, I'm just favoring one kind of consumption over another.  Or put another way, I advocate that leisure time is allocated more sensibly, with unemployed people having less leisure (ie by being employed), and employed people having more leisure.

I think people who complain about consumerism might be trying to express a similar sentiment about not buying status goods.  But ultimately I feel they've botched the point with a poor understanding.

The consumption of goods is one of the most fundamental of goods in society.  If it happens to be true that capitalism leads to increased consumption, that would be one particular point in capitalism's favor.

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I just wrote this as a personal reaction to things I heard "on the street".  However a brief google search revealed that many people have said things that are very similar.  I will look into these and post a follow-up if I find anything interesting.

The moral horror that is ourselves

Consider the following propositions about our society:

• We totally approve of causing pointless pain to certain individuals, even though torture is known to be ineffective.
• Everyone is either a rapist, or implicitly supports rape and sexual assault.
• We enslave and murder because we like the way meat tastes.
• We enslave people, and we think it's okay because they get paid enough to feed themselves.
• In the future, everyone will look back at this era and see something horrible about us, and they will be right.

I am not arguing for the truth of any of these statements, but trying to identify a particular trait they have in common.  Each proposition, if true, is horrifying, because it means you and everyone around you is evil.  And that makes us recoil.

The elder god represents ourselves. (source)

And yet, we might still wish to argue for some of these propositions.  For example, it is entirely true that torture is pointless, and yet supported by most Americans.  And I would say that sexual assault is so widespread that it is frequently accepted as normal.  And even if you do not agree with these statements, you might have your own sharp critiques about society.

One of the strongest cognitive biases is the belief that I am a good person.  This bias extends to society at large.  If society is so evil, and I am a part of society, then I am evil.  I am not evil, therefore...

In my post giving general advice on how to argue, I said that the belief in one's own goodness is such a strong cognitive bias, that it's better to work around it than to directly counter it.  Here we have the same dilemma.  If I wish to argue, for instance, that capitalism is slavery, should I skirt around the moral horror, and reassure people that I am not condemning them as the ultimate evil?  Or should I play up the horror, saying, "that's why it's so important to address this issue"?

And what should we tell ourselves?  Are we complicit in the moral horror that is modern society?  Or are we on a righteous crusade to defeat evil?  Or should we assure ourselves that society's not totally evil, and that it's just this ordinary problem that we're trying to solve?

The weeds represent enslavement, torture, and rape.  Image source unknown.

Our approach to moral horror can be informed by our ethical system. Here, I will discuss utilitarianism, which judges actions based on how well the consequences align with our preferences, and deontology, which judges actions based on the quality of the actions themselves.  It's common for people to use utilitarianism in some situations (eg cost-benefit analyses) and deontology in other situations (eg any talk about "rights").*

*Note I am not saying that this is logically inconsistent.  Many utilitarians believe that things like rights can be justified on utilitarian grounds.  I am merely observing the fact that, on the surface level, some ethical arguments look utilitarian, and some look deontological.  I'm suggesting that it is the surface level which is relevant here, rather than the underlying ethical justification.

Consider the cause of animal rights.* Despite "rights" being in the name, a lot of animal rights philosophy is explicitly utilitarian.  It is not based on an animal analogue to human rights so much as it is based on animal suffering.  Though one of the philosophical critiques of utilitarianism is that implies that all moral actions are obligatory, in practice it makes moral actions less black and white.  There's a sliding scale--if you simply reduce the amount of meat you consume, that reduces harm.  This allows us to focus on small steps to improve the world, rather than focusing so much on how everyone who isn't vegan is evil, and even vegans are complicit.

*Disclosure: I am not a vegetarian.

The situation is different when we talk about rape and sexual assault.  The fundamental problem with rape is that it is a violation of consent.  This is, on the surface, a deontological argument.  It is based on the intrinsic quality of rape as an action, rather than on the consequences.

The fact that we think of it this way allows us to draw some hard lines about what's right and wrong.  But it also plays up the moral horror whenever we talk about rape culture.  It's hard for me to talk about how common sexual assault is in nightclubs, because that is horrifying.  It's hard to talk about the many ways that partners and society can soft-pressure people into having sex that they don't really want, because that is like saying many of your friends are practically rapists.

On the other hand, there are benefits to taking a more black and white view, in a world where people constantly exploit gray areas to justify assault and blame victims.  Or consider a world not too long ago where US had legalized slavery.  If people at the time had been horrified by the society they lived in, they would have been right.

So here's my question: If it would give our poor psyches a break, should we consciously adopt more utilitarian approaches to the big issues afflicting society?

Doing what you love

Should you find a job that you love, or should you just find a job that pays and do what you love on the side?  There is no ultimate answer to this question, only personal preferences and conventional wisdom.

The sense I get from US cultural history is that the conventional wisdom shifts from generation to generation, often tracing economic trends.  The clearest example I can think of is the idea of the "yuppies" in the 80s.  Yuppies were (supposedly) sellouts, people who chose corporate jobs over continuing the revolutions of culture in the 60s and 70s, or so the narrative goes.  In other words, Yuppies chose jobs that paid, rather than doing what they loved.

I am part of the millenial generation.  I feel it is impossible to ascribe motivations to a generation, as if it were a single individual, but I am a rather stereotypical millenial in many regards.  I am overeducated.  I am pessimistic about career, and about the economy.  I don't expect or want much in the way of material goods.  I do not drive.  And I don't love my job.

Unlike the stereotypical millenial, I don't have student debt.  In absence of debt, and in absence of any expensive hobbies, I would be happy with a shorter work week.  Really, we should all have shorter work weeks; it might help reduce unemployment.

I know lots of grad students.  My lack of enthusiasm is common.  But for some reason the cultural expectation is that scientists do what they do for the pure joy of discovery.  Non-scientists view science through the lens of popular science, where everything is cool and exciting.  I can fit my own research into this narrative too.  Liquid helium, ultra-high vacuum, class 4 lasers!  But science isn't all exciting ideas and fascinating discoveries.  It is, first and foremost, a job.  It's work.  I wouldn't do it if I didn't get paid for it.

On second thought, perhaps that's not true.  One of my volunteer projects is analyzing community survey data.  I'm basically doing social science purely because I want to do so.  But considering how little time I put into that project, I think it only serves to show: liking what I do can only get me so far.

But even when "doing what you love" seems unattainable, it sounds like a nice ideal.  It would be great if different kinds of labor could be allocated to exactly the people who like them.  Who could oppose such potential for human happiness?

I don't oppose the ideal.  Rather, I oppose what people are expressing through the ideal:  You are not allowed to like things, unless by liking them you contribute materially to society.  You can't like art unless you're an artist or critic.  You can't like games unless you're a designer or competitor.  You can't like music unless you're a performer.  As for whatever job you might have, you must work really hard at it, because you love to do so.  Forget the 40-hour work week, why would you want to constrain yourself?  And while you may not have much remaining free time to enjoy the income you earn, you can always spend the extra income on status goods.  Giant houses, and lots of things to put in the houses!  That's what comfort is, what luxury is.

To me, comfort doesn't mean having more status and wealth than other people.  It means having more time to do the things I actually want to do.

Commentary on Charlie Hebdo

The buzz last week was about an attack on French magazine Charlie Hebdo, which killed 12 people.  Charlie Hebdo is a sort of French equivalent to Mad magazine, and the attack was in response to satirical cartoons targetting Islamist extremism.

I don't usually have anything to say about news stories like this--my primary comment on almost any tragedy is "that's bad."  You won't even get a "how horrible!" out of me because frankly 12 deaths is not a whole lot compared to other faraway stories which get comparably little coverage.  As for the attack on free speech, the reader may compare it to the French ban on pro-Palestinian protests, which has been in place since July.  One has to adjust their emotional response to account for selective virality bias.

It seems that other people have different comments to add.  In fact, the issue has split my Facebook friends, with a lot of atheist friends hammering on about free speech, and queer friends saying free speech yes, but Islamophobia.  Here is a representative image from American Atheists, and here's a representative article from the other side: "In the wake of Charlie Hebdo, freedom of speech does not mean freedom from criticism".

That last article claims it is obvious that the cartoons are Islamophobic, but it's hard for me to judge since no translations are offered, and the English examples in the same article seem pretty weak.  I guess I don't care enough to look up translations, much less do the necessary research on the context.

However, I agree with the article that we should feel free to criticize the cartoons even in the wake of the attacks.  Jason Rosenhouse points out that if it were a neo-nazi magazine under attack, we'd still talk about freedom of speech, but we'd also feel compelled to say how much we disagree with the neo-nazis.  If some people genuinely feel the cartoons are islamophobic, it makes sense for them to say so even while decrying violence.  The reason American Atheists does not criticize the cartoons is not really because they think they think the cartoons are above criticism, but because they obviously agree, sufficiently, with the cartoons.

Nonetheless, some people think it's inappropriate to talk about any of the context surrounding the cartoons, lest we disrespect the dead.

A useful comparison can be drawn to the concept of derailment.  If I start about talking about the difficulties of women or queer people and you say, "but men/straight people also have problems let me talk about them", that's derailment.  Because you're effectively preventing me from talking about what I want to talk about in my own space without obnoxious interruptions.

Is it derailment to talk about how bad the cartoons are, when the cartoonists are fresh in their graves, and the foundation of liberal society is at stake?  I don't think so.  When a tragedy goes viral, we basically end up having a public conversation about it. If a particular topic is "derailing" the conversation, then there is no place for anyone to talk about that topic.  In a conversation supposedly about free speech, this goes against the spirit.

I think there is plenty of room in a public conversation for people to have many spaces with many topics.  For example, even if what I say here is demonstrably terrible and stupid, it doesn't prevent you from having a more productive conversation elsewhere in your own space.

Why I support a guaranteed basic income

I've been a radical social liberal for a long time, but agnostic about most economic issues.  Macroeconomics is black magic, after all.  Nonetheless, over the past few years my economic politics have skewed more and more liberal, even though I don't blog about it much.

For example, one hypothetical policy I would support is a policy of giving everyone money.

That's a policy that I never would have supported when I was younger.  Even when I was a teenager, I understood that money is a fictitious entity.  If everyone had more money things would just cost more.

Put another way, say we had enough bread and houses to provide food and shelter for a million people.  If you gave everyone money, then prices would just rise until only a million people can afford bread and houses.  The same number of people would starve and go homeless, because it's not really a money issue, it's an issue of how much resources we have.

On the other hand, if you give everyone the same amount of money, that has the effect of redistributing wealth.  It would reduce inequality, basically.  And there really would be fewer starving and homeless people, because we would invest less in producing luxury goods for the most wealthy, and invest more in producing additional bread and houses for the poor.

One thing that colors my view is that I'm part of the millenial generation.  I'm entering the workforce in a time when unemployment is higher than ever.  What do unemployment rates say about our society?  It's possible that it means we're just allocating resources poorly.  But the other interpretation is that we have a surplus of labor.  We're too efficient at producing the goods that we need.  This is a bad thing only because employment is the primary way we distribute money.  If individuals can't find jobs then they're in financial trouble.  The easy solution is to distribute money by other means.

I think the unemployment levels are really just the tip of the iceberg.  When people are desperate for jobs, they'll accept worse jobs.  I'm coming from a cynical grad student perspective, and one of the things I despise is the workaholic culture in academia.  People expect you to work longer than normal hours.  And in order to advance to professorship, most people have to spend years in postdocs for low pay.  You just have to put up with it, because there are too many other people who want your job.

There are also governmental jobs which provide no real value to society.  They're just there because governmental employees can vote, and therefore vote to maintain their own jobs.  I would rather just give those people money instead of having them waste their time to get it.

Why a guaranteed basic income?  Why not welfare instead?  There are two reasons, one economic, and the other social.

Earlier, I learned a bit about how welfare works in the US.  People are awarded a certain amount of money, with a certain percentage of their income deducted.  And in order to remain eligible for welfare, people need to eventually find a job.  But if we have a surplus of labor, why require people to find a job?  And deducting a percentage of people's income amounts to an effective tax on the poorest people.  By giving everyone the same amount of money regardless of income, we remove that effective tax (not to mention cut down on bureaucratic costs).

Welfare also has a social problem, since they're perceived as handouts rather than money that is rightly owned by its beneficiaries.  Taking welfare amounts to admitting that you are unable to provide for yourself.  But this isn't really a matter of individual failure, it's a matter of correcting an economic problem that comes from labor surplus.  Thus, nobody should feel bad about receiving money.  If wealthy people receive the same amount of money, it would be harder to stigmatize.

Anyway, I have the impression that this puts me way to the left of US democrats.  Although to be fair, libertarians often support a similar policy under the heading "negative income tax".

A little welfare math

In an earlier post, I mentioned an argument that welfare decreases wages. The idea is that employers don't need to pay as much, since the wages they provide will be supplemented by welfare. However, in a simple analysis, welfare clearly increases wages. It could be that the simple analysis is wrong (as I showed is the case for a simple analysis of minimum wage), but the simple analysis should still be a beginning for understanding.

Since this is only a personal blog, I did just the bare minimum of research into US welfare systems. I immediately learned that US welfare is shit. I can't believe how little safety net there is in this country. Here are some basic facts:

• The major programs are Social Security, Medicaid, TANF, and SNAP. I ignored the first two because those are more complicated and conditional. 
• TANF (Temporary Assistance for Needy Families) is for extremely poor families with children. For example, a household of four people in Indiana must have income under 36% of the poverty level, and the maximum payment is 17% of the poverty level (and that's assuming your income is zero). 
• Additionally, TANF has a lifetime limit of 5 years, and only 2 years without a job. 
• TANF websites are horrible and most of them won't give the relevant information in an accessible manner. 
• SNAP (Supplemental Nutrition Assistance Program, or food stamps) applies to a much broader class of people, and pays more. For a household of four, you must have gross income under $2552 a month to qualify (or 130% of the poverty level), and you are allotted $632 (with 30% of your "net income" deducted). 
• People in the SNAP program must get a job within three months.

For the sake of analysis, I will take a simplified SNAP as a model. Let's just say that we have a four-person household, and the payments are $630 a month minus 25% of gross income.

The first thing you should notice is that SNAP effectively creates a 25% tax on the first $2520 of your household's income. Already we can see why welfare should increase wages. Workers will demand more money for the same amount of labor, because they're only seeing 75% of that money. Of course, there's a tradeoff between wages and employment. If workers only see 75% of their wages, more of these workers may choose not to get a job at all. Or employers may choose not to hire them in light of the higher wages.

This is all complicated by SNAP's requirement that people get a job. Now that may decrease wages, if it motivates people to look for some job, any job, in order to maintain eligibility.

There's a second way that welfare can increase wages: the decreasing marginal utility of money. I'm making these numbers up, but say you need $100 a month to eat, and $200 a month to eat well. The first $100 prevents you from starving, whereas the next $100 only prevents you from hating your food. If there is no welfare, you might be willing to work a shit job for low pay because it's still better than starving. If you're already getting $100 a month from welfare, you would demand more money for your labor.

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The rest of this post will do a simple mathematical analysis of welfare. You must have javascript enabled in order for MathJax to render the *\LaTeX* equations.

In a simple analysis, the number of low-wage workers employed and the amount of wage they earned is determined by the intersection of supply and demand curves. The demand curve is the number of workers that employers are willing to hire. The supply curve is the number of people willing to work for a certain wage.

 

In panel a I show typical supply and demand curves. However, there are arguments that the demand curve for low-wage workers is unusual in that it has "zero elasticity" (panel b) or "negative elasticity" (panel c). These arguments are complicated and controversial, so I'm just going to ignore the demand curve for now.

Welfare affects the utility function of workers. Normally, we'd just say

**U = L w - c(L)**

 where U is the utility function, L is the fraction of laborers employed, w is the wage, and c(L) is the total cost of all those people working. c(L) is basically a measure of people's subjective preferences. But now the total earnings of each worker is the wage plus welfare, which we'll call t(w). So we have

**U = L t(w) + (1-L) t(0) - c(L)**

 A further complication is the decreasing marginal utility of money discussed previously. If u(w) is the utility of wage w, the the total utility function is

**U = L u(t(w)) + (1-L) u(t(0)) - c(L)**

Here I plot the t(w), u(w), and u(t(w)) that I used. t(w) is wages plus the simplified SNAP payment described previously. We know very little about u(w), so I just used *u(w) = Log(\frac{w + $500}{$500})*.

The supply curve is defined by the point where the marginal worker no longer benefits from working. In other words, it's the point where U no longer increases with L. The derived supply curve is

**u(t(w)) = u(t(0)) + \frac{dc}{dL}(L)**

 Below I show the supply curves before and after applying welfare (assuming *\frac{dc}{dL}(L)* is just proportional to L).

So as far as I can tell, the idea that welfare is "subsidizing" employers makes no sense. Welfare appears to increase wages.  The number of workers may increase or decrease, depending on the elasticity of the demand.

There are a million caveats and complications here, and you should not trust the basic analysis.  For instance, note that the wages payed by the employer are not the same as the profit earned by the employees, since employees miss out on the welfare they could have gotten by being unemployed.  This is just the effective 25% tax from welfare.

One way to get rid of the effective tax is to guarantee everyone a base income. That is, give everyone $630 a month, regardless of their other earnings. This would still raise wages, because of decreasing marginal utility. But then we'd probably have to worry about inflation. I'm not even gonna go there.

I couldn't find any studies (that I understood) on the impact of welfare on wages, so I have no way of knowing whether any of my conclusions are correct or incorrect. I think, however, it was good to learn about our welfare system. If it took a math problem to motivate me to do a bit of research, it was worth it.

Where does Burwell vs Hobby Lobby go wrong?

As I may or may not have mentioned before, my boyfriend has a law degree.  So I get to hear a lot of lawyerly opinions on the recent Burwell vs Hobby Lobby decision, both from him and his friends.  And they seem to contrast with the opinions I get from atheist blogs, where there's lots of panicking about the consequences, but very little explanation of the mechanical details of the decision.

The Hobby Lobby decision was based on the Religious Freedom Restoration Act (RFRA), a federal law from the 90s.  The RFRA says,

Government shall not substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability.

Laws specifically targeted against religions are already unconstitutional, but the RFRA adds religious protection from neutral laws.  For example, if a company bans hats among employees, that is a neutral rule that disproportionately affects certain minority religions which mandate wearing hats.

It's intended to protect religious minorities, because while the legislature is always conscious of the impact on the religious majority, they may ignore the impact on religious minorities.  For example, during prohibition, there was an exception for sacramental wine.  But in the 90s, some Native American employees were fired for using peyote, which is the case that motivated the passing of the RFRA.

Of course, you can imagine neutral laws which really should apply to everyone even if they burden some religions.  Non-discrimination (with ministerial exceptions) seems like an obvious one.  Therefore, RFRA does not completely rule out laws which burden exercise of religions.  Rather, it requires that those laws undergo "strict scrutiny".  That means they must be:

• Justified by a compelling government interest
• Narrowly tailored to achieve that interest
• Be the least restrictive means to achieve that interest

Hold on, isn't women's health a compelling government interest?  Did the Supreme Court decide that it is not compelling enough?

In fact, the Supreme Court did not opine on whether it was compelling.  Instead, they ruled that the Affordable Care Act (ACA) was not the least restrictive means to achieve that interest.  And here's why.  The ACA already exempts nonprofit religious organizations from paying for contraception.  The legislators wrote that in.  So if they made exceptions for nonprofits, why not for-profits too?  How can we argue that the ACA is the least restrictive law when applied to for-profits, when it is already less restrictive on nonprofits?

This is not so much bad because of the direct consequences.  Hobby Lobby employees will still get contraception covered by their health insurance, because the health insurance is required to pay for it when Hobby Lobby doesn't.  Presumably, the insurance providers will just raise non-contraceptive premiums to balance it, and Hobby Lobby can pretend they're not paying for it when they sort of are, really.  But it's bad because it sets bad precedent.

This should provide a road map to the various things that could have been wrong with the Hobby Lobby decision.  Should the RFRA be changed, or removed altogether?  Is the problem (as many argue) that RFRA should apply only to individuals and not corporations?  Is the problem with the legislature, who already made a huge exception for nonprofits?  Or is there something wrong with the slippery slope argument between nonprofits and for-profits?  What do you think?

Minimum wage is complicated

According to a simple economic analysis, minimum wage should decrease employment.

At equilibrium, the wage level is set such that the supply of workers is equal to the demand for workers.  If we artificially set wages higher, then the supply of workers increases (as more people are willing to work) and the demand for workers decreases (as fewer employers are willing to hire).  The level of employment is set by the supply or demand, whichever is lower.  Thus a minimum wage should create a demand-limited market with fewer people employed.

Personally, I would support increasing the minimum wage whether or not it reduces employment.  In light of the gross wealth inequality in the US, I am in favor of transferring as much wealth to unskilled workers as possible.  Thus, I do not actually want to maximize employment, I want to maximize the product of wages and employment.  Even though a higher minimum wage might hurt some people by costing them their jobs, there is a net gain in wealth to the class of unskilled workers.

One thing that annoys me about (other) people who advocate increasing minimum wage is that they never seem to discuss the argument that it decreases employment. Do they believe that decreased employment is an acceptable cost, or do they believe that the simple economic argument is incorrect?  If the latter, why is it incorrect?  Silence is just about the least satisfying rebuttal.

But the other day I heard an interesting argument.  Minimum wage workers currently have their income supplemented by welfare.  This allows employers to skimp on wages, essentially benefiting from welfare.  A minimum wage should be implemented such that employers can no longer do this.

Intriguing, but does it actually work as an explanation?

I wanted to do some simple mathematical analysis, like I did with monopolies and monopsonies, but I immediately ran into problems.  For one thing, a simple analysis of welfare suggested that it should actually increase wages, not decrease them (perhaps I'll show this in a different post).  For another, a quick bit of research revealed that nobody understands how minimum wage affects employment.

Apparently, it's one of the hottest questions in economic research.  A few major meta-analyses show that there is no link between state-level minimum wage and unemployment, and that net positive results are due to publication bias.  However, there might be a link for federal minimum wage.  Economists have proposed all sorts of explanations but few of them I can understand, and none of them have consensus.  One thing's for sure, the simple economic analysis is inadequate.

Lesson learned: I was wrong.  I had a little bit of knowledge of economics, but this is a case where a little knowledge is actively harmful.  I believed that I could apply simple economic analysis when I couldn't.  People who argue that minimum wage does not increase unemployment, but fail to supply any reason for this are in fact taking the correct position.  So far as we can tell, minimum wage does not necessarily increase unemployment, and so far as we can tell, no one knows why.

Post-labor sci-fi

In my writing update, I mentioned an idea for a speculative sci-fi novel which I scrapped.  The underlying concept was that I wanted a post-labor economy, where robots and unlimited energy have taken most of the jobs.  Since jobs are the main way money is distributed, the abundance of free labor impoverishes people.

Incidentally, there was a recent article on 3 Quarks Daily which covered this same idea (via The Barefoot Bum).  So there are people who speculate about this in real life.  And sure, I speculate about it in real life too.  I agree with the idea that there are a lot of bullshit jobs in our society, and I would prefer if instead we had fewer work hours.

In my invented world, when all the jobs disappear, it's primarily the service workers who remain.  Robots can't replace the human touch, or the gracious smile.  Everyone else survives on what little welfare that the upper class begrudgingly grants them.  Presumably there's lots of propaganda to persuade the public that welfare is a moral hazard.

But if I were to speculate for the real world rather than for a story, I'd think that service workers would lose their jobs along with everyone else.  I mean, if robots can replace engineers and business managers, of course they could also replace service workers, smiles or not.

But leaving service workers allows me to create a society where politeness and etiquette form a sort of cultural currency, valued above and beyond their real worth.  A thousand rules of etiquette bloom, and a college education is the only way to understand them.  Personality defects would practically become disabilities.

It's sort of a commentary on the way that anything produced by upper classes are seen as the Highest Art, while anything enjoyed by lower classes is unfashionable.  Like the way that classical concerts are seen as the highest forms of music, above modern rock or even classical music recordings.  Or the way that baby names tend to start among upper classes and migrate down to lower classes (and also from male to female!).

Anyway, it was a cool idea, but I'm really not keen on speculative fiction.  I write so much nonfiction that I'm used to striving for accuracy.  So if my story were speculative, I'd spend too much time on little details that don't make the story any better.  And then I'd feel bad about not being a good enough fortune teller.

In which I think about monopolies

This is part 2 of my previous post.

Why, in a competitive market, are the quantity and price at the intersection of supply and demand?  The answer is that buyers and sellers are not monolithic entities.  As long as the price is above the intersection, a new seller can make money by producing new goods at the marginal cost and selling at the marginal value, even though this lowers the price, resulting in net losses for other sellers.  As long as the price is below the intersection, a new buyer can produce value by paying more for goods, even though this makes it more expensive for all other buyers.

On the other hand, if sellers really are a monolithic entity, then we have a monopolistic market rather than a competitive one.  Under monopoly conditions, the single seller may not wish to sell as much, since whenever the prices decreases, they eat all the losses themselves.

The single seller is free to set the price such that their utility US(p,q) is maximized.  The constraint is that they cannot sell more than buyers demand.  US is defined for all p and q, but we want to determine the maximum US specifically along the demand curve (which as I explained previously, is the same as the marginal value curve).¹ $$\frac{\mathrm{d} \text{US}}{\mathrm{d} q}|_{p=\text{MV}(q)} = 0$$ $$\frac{\mathrm{d} \text{US}}{\mathrm{d} q}|_{p=\text{MV}(q)} = \frac{\mathrm{d}}{\mathrm{d} q}(\text{MV}(q)*q) - \text{MC}(q)$$ $\text{MV}(q)*q$ is the seller's revenue, the price of goods times the total quantity sold.  $\frac{\mathrm{d}}{\mathrm{d} q}(\text{MV}(q)*q)$ is therefore the marginal revenue.  So in a monopoly, the quantity of goods is at the intersection of marginal revenue and marginal cost.  The price of goods is set to the maximum that demand will allow.  Let's look again at figure 1.

 

Figure 1: Monopoly

In a competitive market, the quantity and price are given by the intersection of supply and demand, or marginal cost (MC) and demand (D).  In a monopoly market, the quantity is given by the intersection of marginal cost (MC) and marginal revenue (MR), and the price is given by the demand (D) curve.

Figure 2: Monopsony

I've left out analysis of a monopsony, because it's exactly the same.  Instead of a single seller, there is a single buyer who chooses the price to maximize UB while constrained to the supply curve.

In the previous post, I said it was confusing that the "marginal cost" in figure 2 means something completely different from the "marginal cost" in figure 1.  In figure 1, the marginal cost is the cost to the seller to produce one more unit.  In figure 2, the marginal cost is the cost to a single buyer to buy one more unit (including the additional cost from prices being raised).

Next I want to discuss "deadweight loss", which is the sum total utility (of both the buyers and sellers) lost compared to a competitive market.  When people trade goods for money, both the buyers and sellers benefit.  For the buyer, the goods have more value than the money paid.  For the seller, they are paid more than it cost to produce the good.  I already showed this in my previous post when I gave expressions for utility functions UB and US.  However, it helps to have a graphical interpretation of the utility.

Figure 3: Visual representation of utility to buyers (a) and sellers (b)

First, consider the buyer (figure 3a).  The total value of the goods to the buyer is given by the area under the marginal value curve (red).  But to get the total utility we must also subtract off the price paid for the goods (blue).  Next consider the seller (figure 3b).  The cost of production is given by the area under the marginal cost curve (green).  The utility to the seller is equal to the total price paid to buy the goods (blue) minus the total cost to produce them (green).

In figure 1, the utility to buyers is shown in red (consumer surplus), while the utility to sellers is shown in blue (producer surplus).  Relative to a competitive market, a monopoly has two effects.  First, the producer gets more utility while the consumer gets less.  Second, the sum utility is smaller, by an amount shown by the yellow "deadweight loss" area.

Now that I've learned about the concept of deadweight loss, I understand a bit why some people think a "free market" is best (although clearly there need to be restrictions on monopolies, so I think "free" is a misnomer).  But given that this is only the simplest market imaginable, it's not clear that it generalizes to more realistic markets.

Even in this simplest case, I question the meaningfulness of the "total utility".  I think, for instance, there is some intrinsic utility to a more fair or more even distribution of wealth.  The distribution of wealth that results from a competitive market basically bears no relation to what is fair.

And there's another problem that comes from the initial uneven distribution of wealth.  The utility to the consumers is not measured directly, but implied by how much money consumers are willing to spend.  But if you think about why some consumers are less willing to pay for a good, it's not necessarily because they derive less value from the good.  Often it's because they are poorer, and therefore place a higher utility value to the dollar.  Thus the utility to the buyers is not equal to the amount of money they would pay.  It only seems that way if you convert utility to dollar units, ignoring that dollar units are larger to some people than to others.

One way you can fix the problem is by redistributing all wealth evenly.  I think there might be a few kinks in that particular solution though...

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1. This illustrates a mathematical distinction between derivatives and partial derivatives.  When we have a function of two variables, like US(p,q), the derivative isn't uniquely defined unless we specify a particular direction in the (p,q) plane.  So we restrict the (p,q) plane to a particular curve, and find the slope along that curve.  The partial derivative is the slope along a p=constant curve.  But here I take the derivative along the demand curve.

Things I don't understand: health insurance

This will not be an intelligent post.  I do not have intelligent things to say about health insurance..  I do not understand health insurance: what is good about it, what is bad, and the impact of various policies.  I am also unable to make sense of what the internet tells me about health insurance.

Health insurance costs money, and what it gives in return is money.  But if that were all, it seems like you can't really win against an insurance company that is still in business.  Why is insurance ever worth it?

Most insurance is about reduction of risk.  If you don't have homeowner's insurance, a house flood could financially ruin you.  But if the cost of home repairs were spread out over all possible worlds, it might be easier to handle, even if there is some overhead going to an insurance company.

Of course, there's always this problem where different people have different levels of risk.  Either there ends up being price discrimination, or insurance becomes too expensive for people with low risk, or insurers refuse to sell to people with high risk.  I think Obamacare is meant to solve this problem by encouraging everyone to buy healthcare regardless of their level of risk, and by putting restrictions on price discrimination.

Although it also seems that risk reduction is not the only function of health insurance.  Why does health insurance pay for regular check-ups, and why is it so expensive to pay for health care independently?

Maybe it's a little like restaurants.  In theory, restaurants should be cheaper than cooking at home, because they benefit from economies of scale.  In practice, restaurants are often more expensive because they offer service, space, and food quality.  The economy of scale, the service, the space, and the food quality often come in the same package because it's efficient to do it that way.  Perhaps the same is true of health insurance: risk reduction and regular check-ups come in the same package because it's efficient to do it that way.  I'm not sure why though.

One idea is that preventative screenings are cost-efficient, but people irrationally avoid them because they cost money now.  By reducing the marginal cost of preventative screenings, health insurers actually make health care cheaper by bypassing a psychological obstacle.

Another idea is that health insurers are able to allocate people to doctors or health care providers more efficiently than independent buyers of health care.  Or they reduce administration costs.

One last idea is that health insurers create a monopsony, which is like a monopoly except instead of one seller, there is one buyer.  Because there are fewer health insurers than people, they have more power to tell health care providers to lower their prices.  I barely understand how a monopsony works, but it causes prices be lower than the "efficient" market value, whatever that means.  It seems to me that the more of a monopsony there is for health care, the more of a monopoly there is for health insurance, and I don't understand how those things interact.

Many progressives advocate going further than Obamacare, adopting a "single-payer" system.  I don't understand what the impact of this would be.  I guess it would create more of a monopsony?  People on the internet say it will reduce administration costs.

Dear readers, do you understand health insurance, or no?

A hundred Zimmermans

I'm not the most compassionate person, and the death of Trayvon Martin hasn't had the emotional impact on me as it has had on others.  However, I am much more disturbed by the possibility that it represents a larger trend, and that the well-publicized acquittal of shooter George Zimmerman may exacerbate the trend.

It's much easier to know something is deeply wrong with the case than to pinpoint exactly where it went wrong.  I've heard some people argue that the jury was biased.  Other people have argued that it was not an error in the verdict, but a fucked up system within which it was the correct verdict.

Initially I thought that there might be two unrelated injustices.  One injustice to kill Martin, and another injustice to acquit Zimmerman.  On the one hand, you have people who immediately suspect any black kid in their neighborhood, and feel it's appropriate to stalk them with a gun.  On the other hand, you have a court system which seems to give too much of an advantage to self-defense claims.  Isn't that just like life, to have such a high density of injustices that they're practically bumping into each other?

However, the evidence simply does not bear out my idea of two unrelated injustices.

See that?  That's a hundred Zimmermans right there.  Homicides where a white person shoots a black victim are much more likely to be ruled as justified by self-defense.  The ratio is even greater in states with SYG ("Stand Your Ground") laws.  The number of white-on-black homicides ruled to be justified is 236 (using data from 2005 to 2010).  So when I say that's a hundred Zimmermans, it's no exaggeration, it's an understatement.

Just imagine these same prejudices and disparities flowing not just through homicide trials, but through every aspect of life. 

My understanding is that in states without SYG, people have a duty to retreat before resorting to self-defense.  In states with SYG, people may use self-defense in certain cases even if they have the opportunity to retreat.  In an earlier report of the study, it shows that the primary effect of SYG laws is to increase the homicide rate by 8% (but Wikipedia says there are a few disagreements on this figure).

A simple hypothesis is that jurors are biased towards white shooters of black victims, and that SYG laws insert a little more subjectivity into the the trial, giving jurors more opportunity to be affected by their biases.  I also thought that the data would be confounded by the fact that there is a preponderance of SYG states in the South; however, the study authors seem to have considered this already.

In the trial of Zimmerman, SYG wasn't used by the defense.  Evidence showed that Zimmerman pursued, so he wasn't covered under Florida's SYG.  Therefore, Zimmerman's acquittal doesn't necessarily reflect the injustice of SYG per se, but rather reflects the injustice that appears even in states without SYG.

The data, though preliminary, is sufficient to convince me.  Stand Your Ground increases violence AND it has disparate impact on black people.  However, repealing Stand Your Ground will still leave more than half of the problem, and may not even have changed the individual case of Martin and Zimmerman.  More is needed, but it's not clear what.  Maybe neighborhood watch volunteers shouldn't be allowed to carry guns?  Maybe we need to change the attitudes of the typical juror?

Quick comment on Kaitlyn Hunt

In the news last week: 18-year old Kaitlyn Hunt, living in Florida, was in a relationship with a 14-year-old girl.  The relationship was consensual, but the parents of the 14-year-old disapproved, and charged Kaitlyn Hunt with "lewd and lascivious battery on a child 12 to 16" (basically statutory rape).  Kaitlyn Hunt falls under Florida's "Romeo-Juliet" laws because her victim was over 14, and Kaitlyn was less than 4 years older.  However, the Romeo-Juliet laws do not prevent her from getting two felonies, they only offer a path for her to get off of the sex offender registry.

The story of Kaitlyn Hunt has been national news, especially in LGB news outlets such as The Advocate.

Nonetheless, I don't really think of it as an LGB issue, but a criminal law issue.  If it is unjust for Kaitlyn Hunt to get two felonies, then it is also unjust for anyone else in the same situation.  The Romeo-Juliet law should be expanded to either reduce sentences or remove charges entirely.  (I also believe there should be no sex offender registry whatsoever, but I would not defend this in an argument.)

Because the laws are too strict, there are too many cases where people are technically breaking the law, but no one cares to enforce the law.  This gives the opportunity for prejudicial selective enforcement, which is what happened to Kaitlyn Hunt.  The parents of the 14-year-old allegedly blame her for making their daughter lesbian, and this motivated the charges.

Criminal law and justice issues disproportionately affect minorities because of selective enforcement.  The selective enforcement of laws against black people is so common that it hardly counts as news.  This is why anti-racist activists care a lot about criminal justice reform.  I'm less convinced that there is systematic selective enforcement of statutory rape laws against LGB people, but it's still good that it got the attention of LGBT activists.

(expanded from a post on Tumblr)

How well did Nate Silver do?

The news is saying that Nate Silver (who does election predictions at FiveThirtyEight) got fifty states out of fifty. It's being reported as a victory of math nerds over pundits.

In my humble opinion, getting 50 out of 50 is somewhat meaningless. A lot of those states weren't exactly swing states! And if he gets some of them wrong, that doesn't mean his probabilistic predictions were wrong. Likewise, if he gets them right, that doesn't mean he was right.

I thought it would be more informative to look at Nate Silver's state-by-state predictions of Obama's vote share. That way, Nate could be wrong even in states like California.  So here's what I did for each state: I took the difference between the final prediction of FiveThirtyEight, and the vote share reported by Google this morning.  Then I divided this difference by Nate's margin of error.  See the results in a histogram below.

What the figure shows is that Nate's predictions were more accurate than Nate himself claimed!

The mean of the actual distribution is -0.14, which means that Obama did slightly worse than Nate predicted, but by an amount that can be explained by random error.  The standard deviation of the distribution is 0.5, which means that Nate predicted an error that was twice the actual error.

Of course, Nate's reported error is likely due to expected systematic error.  For example, if all states were slightly more in favor of Obama, that would be a systematic error.  Assuming that Nate Silver predicted a spread of 0.5, he must have expected a systematic error of about 0.85 in one direction or the other.

The founding fathers

Next time you hear about the founding fathers of the U.S., remember that the founding fathers are responsible for our plurality voting system and the electoral college.  And that's why Ohio is electing the president.

In fact, originally, the vice-president was to be the runner-up.  The founding fathers sure knew what was best.

Funniest moments in the California Voter Guide

The California proposition system is a little ridiculous, and the most ridiculous part is the arguments that appear in the official voter guide.  Besides the BUZZWORDS IN ALL CAPS, they also never make rebuttals.  Rather than using the "rebuttal" space to address their opponents' points in any way, they just repeat the same points that were in their "argument" space.  This allows everyone to make really silly arguments, and it's only the most outrageous ones that ever get rebutted.

I'm going through the eleven propositions highlighting moments I thought were funny.  I'm not an especially informed voter, but writing this motivates me to inform myself a bit more.  Note that I may point out silly things said even by the side I agree with, but I make no claims of impartiality or balance.

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Proposition 30 temporarily increases sales tax by 1/4 %, and increase the marginal income tax rate of filers who earn over 250K a year (that number is larger for joint filers and households).  The $6 billion additional revenues will prevent impending $6 billion cuts to education programs.

[Opponents:] PROP. 30 IS NOT WHAT IT SEEMS: It doesn't guarantee even one new dollar of funding for classrooms.

"NOT WHAT IT SEEMS" sure is an all-purpose argument.  I found this funny because the proposition is explicitly meant to prevent cuts, not to increase spending.

Proposition 31 reforms something about the budgeting process, and I don't really understand it.

[Supporters:] [Proposition 31 will] Prevent state government from spending money we don't have.

As I recall, California is in debt, and thus all the money we spend is technically money we don't have.  For some reason, I think eliminating the entire California budget is not a winning proposition.

Proposition 32 prohibits unions and corporations from using payroll-deducted funds for political purposes.  It also prohibits them from making "political contributions", which is one of multiple ways to spend money on politics (it does not prohibit "independent expenditures", which are another way).

The proposition is kind of funny in itself.  It's supposed to look "fair", because it applies to both unions and corporations, but only unions really get money from payroll deductions.  Corporations get money from profits.

[Supporters:] SPECIAL INTERESTS ARE NOT TELLING YOU THE TRUTH.

LOL buzzwords and generic arguments.

[Opponents:] [Prop. 32] costs Californians over a MILLION DOLLARS for phony reform.

If you put it in all caps, it sounds like a lot, but in reality that's pebbles.

Proposition 33 allows auto insurance companies to discriminate prices based on whether the person has been covered by auto insurance over the past five years.  Exemptions are made for people who didn't have auto insurance due to layoffs or furloughs or military service.  The opponents point out that the proposition is 99% funded by Mercury Insurance's chairman.

[Named supporters include:] Estercita Aldinger
Small Business Owner

Another buzzword!  Guess what small business it is.  Hint: It's auto insurance.

Proposition 34 repeals the death penalty, and applies retroactively to people already sentenced to death.  The proposition also gives a one-time $100 million to law enforcement.  The legislative analyst estimates that it will otherwise save at least $100 million a year in court costs.

[Supporters:] Evidence shows MORE THAN 100 INNOCENT PEOPLE HAVE BEEN SENTENCED TO DEATH in the U.S., and some have been executed!

Look where in the sentence they stopped using all caps.  One wonders why they're talking about the entire U.S. rather than just California.

[Opponents:] Abolishing the death penalty costs taxpayers $100 MILLION OVER THE NEXT FOUR YEARS AND MANY MILLIONS MORE IN THE FUTURE.

This is so hilariously misleading.  The $100 million is not an ongoing cost, but a one-time cost which was attached to the bill but appears otherwise unrelated to the death penalty.  I don't know where the "many millions more" comes from, but I'm going to believe the legislative analyst instead.

[Opponents:] JERRY BROWN SAYS THERE ARE NO INNOCENT INMATES ON CALIFORNIA'S DEATH ROW.

Well, sure, Jerry Brown would know.  And I bet the California court system agrees.  If the courts thought any of them were innocent, they wouldn't be on death row!

Proposition 35 increases penalties for human trafficking, requires that traffickers register as sex offenders, and that sex offenders provide information about their internet activities.  There's some other stuff in there too.

The bill is opposed by sex workers, but they're obviously fighting a losing battle because hardly anyone is going to have sympathy for Erotic Service Providers Legal, Education, and Research Project, Inc.

The part that I found funny was that the opponents were obviously such amateurs.  Instead of using the traditional ALL CAPS, they instead provided urls to articles.  Who's gonna bother typing all those things into their browsers?  It's like they think the way to win an election is to provide information, rather than to mislead and appeal to emotion.

Proposition 36 reforms the three strikes law such that the third strike must be a serious or violent felony (rather than any old felony).  Some people convicted under the three strikes law may petition to have this new rule apply to them.  The legislative analyst estimates that this will save $70 million a year, increasing up to $90 million a year.

[Opponents:] A hidden provision in 36 will allow thousands of dangerous criminals get their prison sentence REDUCED and then RELEASED FROM PRISON early.

It's not exactly hidden.  It's right there in the official summary!

[Opponents:] 36 WON'T REDUCE TAXES.

Yes indeed.  It is not a tax reduction bill.  I read the summary.

Proposition 37 requires that genetically engineered foods be labeled as such.

[Supporters:] Proposition 37 will help protect your family's health.  The FDA says "providing more information to consumers about bioengineered foods would be useful."  Without accurate labeling, you risk eating foods you are allergic to.

That sure is a quote mine if I ever saw one!  I also like how they switch to talking about allergies as if that were a relevant point.

[Opponents:] [Prop. 37] EXEMPTS [from labeling] TWO-THIRDS OF THE FOODS CALIFORNIANS CONSUME--including products made by corporations funding the 37 campaign.

That just makes me wonder how they are counting foods.

[Opponents:] [Prop. 37] would cost taxpayers millions.

There's an error there: they forgot to put "MILLIONS" in all caps.

Proposition 38 is another bill that temporarily increases taxes for education funding, just like proposition 30.  The tax looks less progressive, and I get the sense that 38 has less support than 30.  Proposition 38 and 30 are conflicting initiatives, and the one that gets more votes is the one that will take effect.  (Technically, if 38 gets more votes, part of 30 will still go into effect.)

[Opponents use this as a section title:] $120 Billion Income Tax Hike on Most Californians

Here they inflate the numbers by omitting the fact that it's $120 billion over 12 years.

[Opponents:] If you earn $17,346 or more per year in taxable income, Prop. 38 raises your California personal income tax rate by as much as 21% on top of what you pay the Federal government.

There are two jokes hidden here.  First, by 21% they really mean that for certain tax brackets, the income tax increases from 9.3% to 11.3%.  Second, the tax bracket for which this occurs is not the one above $17,346, but the one above $500K. lolmath.  This one was so shameless that it actually got mentioned in the rebuttal!

Proposition 39 changes the way multistate businesses calculate the taxes, leading to an increase in annual revenues of about $1 billion.  $550 million of that is dedicated to energy efficency and clean energy jobs, while the rest would likely be spent on public schools and community colleges.

[Named proponents include:] Tom Steyer, Chairman
Californians for Clean Energy and Jobs

Jane Skeeter
California Small Business Owner

 My boyfriend pointed out that Californians for Clean Energy and Jobs was a front organization.  If you look up Tom Steyer, he does many notable things, and Wikipedia doesn't consider Californians for Clean Energy and Jobs to be among them.  I was interested to see what "small business" Jane Skeeter owns.  Apparently, it's a glass sculpture company.  Actually, that's kind of cool!

[Supporters:] LEGISLATURES AND LOBBYISTS CREATED THE LOOPHOLE IN A BACKROOM DEAL IN 2009.

[Opponents:] Prop. 39 ALSO ADDS NEW BUREAUCRACY--MILLIONS IN SALARIES AND PENSIONS FOR POLITICAL CRONIES.

Everyone is using the all caps buzzwords!

Proposition 40 is a referendum to approve the new state senate districts created by the Citizens Redistricting Commision, which was created in 2008 to reduce gerrymandering.  Apparently, no one opposes Proposition 40.

My boyfriend had to explain this one to me.  People may challenge state senate districts by making a state proposition.  Confusingly, the challengers want a NO vote on the proposition, since by convention a YES means approving the districts.  Here, the NO sponsors appear to be senators who wanted more gerrymandered districts for this election.  However, the California supreme court ruled that even if Proposition 40 got voted down, it would only apply to the next election, not this one.  Following this ruling, the sponsors withdrew their campaign.

By withdrawing their sponsorship, the senators are basically admitting dishonesty.  If they truly thought the districts were bad, they would continue to ask for a NO vote.  But they really only wanted a NO because they thought it would help them get reelected this one time.

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Wooo democracy.

Current lab work: Helium shortage

Did you know: there is a national helium shortage?

Little kids are gonna grow up without helium balloons in their childhood!  Football games will have to discontinue their ancient traditions of releasing thousands of helium balloons into the air at half time!  Perhaps more importantly, doctors will be unable to maintain the magnets of their MRI machines.  And most importantly for me, it will impact my research.

One of the things I do in my lab is cool superconducting samples with liquid helium.  A company delivers our helium in 100 liter dewars.  I roll this dewar to the elevator, press an elevator button, then run down the stairs to catch up with it.  This is a safety precaution, so that if there is a leak, it doesn't displace all the oxygen in the elevator and suffocate me.

Earlier, I had gone for a month and a half without helium.  During the time I meant to be experimenting, I read about the national helium shortage instead.

Helium is not a renewable resource.  Because helium is a very light molecule, at thermal equilibrium it moves faster than other air molecules.  Helium doesn't stay in the atmosphere very long because eventually the molecules go fast enough to simply escape the earth.  Instead we get our helium from natural gas deposits.

Back in 1960, the US government thought helium would be useful for military dirigibles or the space race or something, and they put lots of helium underground in the National Helium Reserve (NHR).  Later, the NHR would accumulate debt.  In response to the debt, congress passed the Helium Privatization Act in 1996.

So the government wanted to privatize helium, and to encourage this, they're selling off all the helium in the NHR.  At really low prices (enough to pay off the debt).  At a slow, fixed rate (I think this is a physical limitation of the extraction process?).  For an extended period of time (until 2018-2020).  Private helium companies can't compete with this, because they have to build all the infrastructure from scratch, while the NHR already has it.  And because helium is so cheap, a lot of users don't bother recycling it.

Something about this just seems dumb on Congress' part.  If they had kept helium nationalized and sold it at reasonable prices, I'm sure the debt would have been paid off by now.  If they wanted to encourage private helium companies, they shouldn't have mandated the fire sale.  They should have sold off ownership of the reserve like a publicly traded company or something like that.

Wealth distribution: a model

The above chart shows the United States wealth distribution, alongside with what people think the wealth distribution is, and what people think it should be.  It comes from a paper by Norton and Ariely earlier this year, and it's made the rounds in the news.

That's pretty interesting, but I always find myself wondering how to interpret this.  Is the wealth distribution unfair, or are people just clueless about wealth distribution?  Probably both.  I feel pretty clueless about it myself.

To be honest, the very way the data is presented seems unintuitive to me.  I mean, I'm a physicist, so what I consider "intuitive" is all out of whack.  But seriously, the wealth owned by the top 20%?  I have very little sense of what to expect from such a number.  It has to be somewhere between 20% and 100%.  84% seems like too much, but what do I know?

If I were to pick a wealth distribution, I would start with a model, and from there calculate the percentage owned by the wealthiest 20%.  So here's my model: wealth has a normal distribution on a log scale.*  People who are one standard deviation above the mean own N times more than the median.  People who are one standard deviation below own N times less than the median.  N is a number that we can choose.  For graphing purposes, I am choosing N=2.718 (Euler's number).

In the above graph, the median wealth is 1, meaning that half of people earn more than that and half earn less.  But the mean wealth is actually more than that, since the distribution is skewed.  And the most common amount of wealth (called the "mode") is about 40% of the median.

The next step is to translate this to the amount of wealth owned by the top 20%.  So that's what I did for a few values of N:

(Note that though my plot has similar colors to the one at top, they aren't exactly the same since I split the top 20% into three groups.)

I showed N=6.5 because that's the number that seems to correspond to reality, according to Norton & Ariely.  I showed N=2.718, because that's the number I would have guessed if I had never seen the real data.  I showed N=1.5, because that's what strikes me as a "fair" distribution.  In other words, I would think it was fair if people who are one standard deviation above the median own 50% more wealth.  But in reality, they earn more than six times as much wealth.

I was surprised how similar my bar graph is to the one in Norton & Ariely.  I'm quite sure that most people answering this poll have no understanding of normal distributions or log scales, and I was all set to conclude that people are clueless.  I'm surprised to find that I agree with the popular opinion, because I think N=1.5 seems ideal.

Of course, the "ideal" value of N is completely arbitrary.  What do you think is an ideal value of N?  If you like, I can calculate the resulting wealth distribution.

*Some technical details: A normal distribution means that the probability density is exp[-y²/(2*log(N)²)].  But here, y is not the amount of wealth, but the log of the wealth.  When I transform from a log scale to a linear scale, the probability density becomes exp[-log(x)²/(2*log(N)²)]*1/x, where x is the ratio of the wealth to the median wealth.  This is the function I have plotted in the graph.  This is, by the way, just about the simplest model imaginable.

Vote vote vote!

Tomorrow Today is Election Day!  I am celebrating Election Eve by finally taking a look at this California voters guide here.
...
Oh, geez, I don't really have an opinion on most of this stuff.  And of course the stuff I do have an opinion on, I could never hope to say anything interesting about.

For example, I understand that Prop 23 basically prevents cap and trade from going into effect... so no on Prop 23.  Prop 19 legalizes marijuana under state law... so yes on 19.  Wow, I will never persuade anyone on these and my opinions are basically worthless.  Well, they're worth one vote I guess.

I think Prop 27 is pro-gerrymandering and prop 20 is anti-gerrymandering.  I, uh, don't really understand the pros of gerrymandering.  But, uh, several of the voters guides I'm looking at support 27 over 20, so maybe I don't really understand what's going on.

You'd think my skeptical knowledge would prepare me to sort through all this nonsense, but my feeling now is that it really doesn't.  It's not like they're using complicated arguments or anything.  It's just a bunch of one-step arguments that sound like bullshit.  The rebuttals in the official voters guide can't even be bothered to mention the opposing arguments much less address them.

I have only understood a small fraction of the decisions here, and then my internet went out for a few hours.  Clearly I am a terrible American with terrible internet service.  Now it is Election Day already.