Category Archives: Web Article Review

what is a p-value?

Five Thirty Eight has a video of statisticians trying to explain what a p-value is. Well, what’s disturbing to me is that they won’t really try. Then again, the maker of the video very well may have cherry picked the most entertaining answers. I can’t reproduce the research so I have no way of knowing.

Here’s another article slamming the humble p-value. It’s true, there will always be some false positives if the data set is large enough. As an engineer, I try to use statistics to back up (or not) a tentative conclusion I have reached based on my understanding of a system. I will question a statistically significant result using my understanding of a system. That way both statistics and system thinking can reinforce and make each other stronger, rather than our relying exclusively on one or the other. Another way to think about this is that as data sets grow and our traditional engineering system analysis methods are just taking too long to apply, we can use statistics to weed out a lot of the data that is clearly just noise, and then focus our brains on a reduced data set that we are pretty sure contains the signal, although we know there are some false positives in there. So i say relax, use statistics, but don’t expect statistics to be a substitute for thinking. Thinking still works.

 

George Soros

George Soros is worried that the China stock market crash could trigger a new financial crisis, or the next phase of the ongoing financial crisis:

China is struggling to find a new growth model and its currency devaluation is transferring problems to the rest of the world, Soros said in Colombo. A return to positive interest rates is a challenge for the developing world, he said, adding that the current environment has similarities to 2008.

Global currency, stock and commodity markets are under fire in the first week of the new year, with a sinking yuan adding to concern about the strength of China’s economy as it shifts away from investment and manufacturing toward consumption and services. Almost $2.5 trillion was wiped from the value of global equities this year through Wednesday, and losses deepened in Asia on Thursday as a plunge in Chinese equities halted trade for the rest of the day.

“China has a major adjustment problem,” Soros said. “I would say it amounts to a crisis. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008.”

the future of payments

Here’s an article on the future of payments. Not only is cash becoming obsolete, but the idea of a physical credit card is quickly becoming obsolete, replaced right now by mobile apps, and eventually by RFID implants and facial recognition. Somehow money that is just invisible transactions in the air seems less real to me. But then, credit cards seemed less real than cash just recently, and before that paper money seemed less real than gold and silver. Eventually, we will get used to this too an it will seem real. Of course, any form money is only as real as we collectively beiieve it to be.

Joseph Stiglitz on “The Great Malaise”

Joseph Stiglitz is calling the current world economic slump “The Great Malaise”.

The economics of this inertia is easy to understand, and there are readily available remedies. The world faces a deficiency of aggregate demand, brought on by a combination of growing inequality and a mindless wave of fiscal austerity. Those at the top spend far less than those at the bottom, so that as money moves up, demand goes down. And countries like Germany that consistently maintain external surpluses are contributing significantly to the key problem of insufficient global demand.

At the same time, the US suffers from a milder form of the fiscal austerity prevailing in Europe. Indeed, some 500,000 fewer people are employed by the public sector in the US than before the crisis. With normal expansion in government employment since 2008, there would have been two million more.

Moreover, much of the world is confronting – with difficulty – the need for structural transformation: from manufacturing to services in Europe and America, and from export-led growth to a domestic-demand-driven economy in China. Likewise, most natural-resource-based economies in Africa and Latin America failed to take advantage of the commodity price boom underpinned by China’s rise to create a diversified economy; now they face the consequences of depressed prices for their main exports. Markets never have been able to make such structural transformations easily on their own.

His solutions sound familiar – “Far-reaching redistribution of income would help, as would deep reform of our financial system – not just to prevent it from imposing harm on the rest of us, but also to get banks and other financial institutions to do what they are supposed to do: match long-term savings to long-term investment needs.”

economics of parking and commuting

The economics of commuting and parking are gradually shifting.

What tenants want in an office building is changing, and the old model of the isolated suburban office park is going the way of the fax machine. That’s according to a new report from Newmark, Grubb, Knight and Frank [PDF], one of the largest commercial real estate firms in the world.

The old-school office park does “not offer the experience most of today’s tenants are seeking,” according to NGKF. As a result, the suburban office market is confronting “obsolescence” on a “massive scale.” More than 1,150 U.S. office properties — or 95 million square feet — may no longer pencil out, the authors estimate, though a number of those can be salvaged with some changes.

“Walkability and activated environments are at the top of many tenants’ list of must haves,” the report states. Office parks in isolated pockets without a mix of uses around them must have “in-building amenities” –including a conference center, a fitness center, and food service — to remain competitive, according to NGKF: “If tenants are not going to be able to walk to nearby retail or a nearby office property to get lunch, they had better be able to get it at their own building.”

Meanwhile the economics of city center parking is also shifting, but city politics are often holding back the changes.

The idea that building more parking capacity will only increase the number of cars in a neighborhood, or conversely, that removing parking spaces can reduce the number of cars often gets short shrift at neighborhood zoning meetings, but the evidence here suggests this is basically how things work.

When parking lots go away, parking conditions tighten, driving becomes more unpleasant, and some people respond to this by ditching their cars. Rather than enduring permanent traffic jam conditions, neighborhoods simply level down to a new equilibrium with fewer parking spaces, fewer cars, and higher “alternative” mode share as parking gets tighter…

Because [Philadelphia] City Council and the PPA set the prices for curb meters and residential permits so much lower than the rates for off-street parking, drivers have a strong incentive to seek out free or cheap curb parking first, before ultimately relenting and parking in a garage when things get desperate. The George Costanza parking strategy is a great example of a “smart for one, dumb for all” practice that makes sense in terms of individual incentives, but in the aggregate just adds up to a lot of unnecessary traffic congestion.

So Philadelphia, a first step would be to get rid of mandatory parking minimums in private development and just let the market decide. A second would be to let the market decide prices for on-street parking too. The politics of this can be difficult in residential neighborhoods, because that is where the voters are, whereas the office workers are a mix of voters and suburban commuters. But many of Philadelphia’s residential neighborhoods are pretty close to employment centers, making walking a very viable option. Most of the others are very well served by public transportation (that is, public transportation is pretty frequent and goes pretty much everywhere, which is not to say it is always fast or clean or the people running it all have a fantastic attitude). Protected bike lanes and secure bike parking might help people make those trips that are a bit long to walk, and also help people access public transit stops better. There is also the phenomenon of reverse commuting, where service industry jobs in the suburbs can pay better than those in the city, so city residents have an economic incentive to make the trip, but these commutes can be tough and are much easier by car. Boosting the minimum wage and promoting tourism in the city might help a little here, but the service industry is probably not the employment growth industry of the future, The long-term solution here is the thorny one that has alluded our country for decades – educate our children, provide them with the mental tools and marketable job skills they need to make an income, and help them build assets.

2015 Luddite Awards

The Information Technology and Innovation Foundation has awarded the 2015 Luddite awards, Congratulations to the following winners:

  1. Alarmists tout an artificial intelligence apocalypse.
  2. Advocates seek a ban on “killer robots.”
  3. States limit automatic license plate readers.
  4. Europe, China, and others choose taxi drivers over car-sharing passengers.
  5. The paper industry opposes e-labeling.
  6. California’s governor vetoes RFID in driver’s licenses.
  7. Wyoming outlaws citizen science.
  8. The Federal Communications Commission limits broadband innovation.
  9. The Center for Food Safety fights genetically improved food.
  10. Ohio and others ban red light cameras.

In #1 and #2, they argue that any risks from artificial intelligence are so far off that we shouldn’t worry about them now, and that the spillover effects from military AI research will be beneficial overall. In #8, they come out against net neutrality (at least, the recent U.S. legislation with that name). And in #9, they make some claims in favor of genetically modified food organisms that I hadn’t heard before:

Biotechnology is playing an increasing role delivering innovations in agriculture that the world desperately needs to meet rising demands for food, feed, and fiber, as the world’s population continues to grow. The most comprehensive meta-analysis to date shows biotech innovations in crop improvement have increased agricultural yields on average by 22 percent, reduced pesticide use by 37 percent, and increased farmer income by 68 percent. Improvements in animal husbandry have lagged, however, despite numerous needs and opportunities. That changed this year when the U.S. Food and Drug Administration (FDA) approved the sale of fast-growing AquAdvantage bioengineered salmon. In their ongoing attempt to ban all genetically improved foods, an organization called Center for Food Safety announced plans to sue the FDA to block the approval.

The salmon represents a real innovation that will improve people’s health while reducing the price of food. It has been improved to reach market size in half the usual time (16-18 months, rather than the usual 32-36) on 20 percent less feed, meaning that for the first time salmon could be a low-cost substitute for meat in American diets. The salmon is intended to be grown in concrete tanks in warehouses close to major markets, like Chicago. The fish are sterile, so they cannot breed with wild salmon in the unlikely event they escape from their concrete tanks and get to an open ocean. They also have been designed to eliminate the potential downsides sometimes associated with conventionally farmed Atlantic salmon, which have been observed to escape from their sea pens and carry parasites or diseases into wild populations.

The FDA took more than a decade to review data on the salmon to ensure it would be safe for humans to eat. At the end of an exhaustive review process that examined thousands of pages of data and scientific literature, the FDA concluded the AquAdvantage salmon is, in all respects relevant to health, safety, and nutrition, indistinguishable from any other Atlantic salmon. Thus it is safe for consumers to eat and requires no special labels. These findings elicited an entirely predictable response from the neo-Luddite enemies of innovation.

I am not necessarily against all bioengineering of food, but I am concerned about biodiversity generally and the resilience of our food-growing system. Even if genetically modified (or hybridized or plain old inbred) organisms are deemed safe for consumption, you don’t want your entire food supply to come from a very narrow gene pool or to be controlled by a very narrow range of interests. With any new technology, you can pursue it while actively taking steps to mitigate the risks, and constantly asking yourself the hard questions about the ethics – identifying that line between right and wrong and choosing not to cross it.

Thomas Picketty

This column by J. Bradford Delong is meant to criticize Thomas Picketty, but in the process he has a good summary of Picketty’s work:

Our reversion to the economic and political patterns of the Gilded Age is to be expected as the economies of North America and Europe return to what is normal for a capitalist society.

In a capitalist economy, Piketty argues, it is normal for a large proportion of the wealth to be inherited. It is normal for its distribution to be highly unequal. It is normal for a plutocratic elite, once it has formed, to use its political power to shape the economy in a way that enables its members to capture a large chunk of a society’s income. And it is normal for economic growth to be slow; rapid growth, after all, requires creative destruction; and, because what would be destroyed would be the plutocrats’ wealth, they are unlikely to encourage it.

Later Delong talks about how Keynes might rebut this argument:

Unequal wealth distribution, in this view, produces what Keynes called “the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital.” The result is an economy with relatively equal income distribution and a polity in which the wealthy have a relatively small voice.

So as the rich corral more and more of the wealth, they become more and more of a minority. Initially the 1% preys on the 99%, then the 0.1% on the 99.9%, and so on. At some point, there is not enough wealth or economic energy remaining for everyone else that the 0.001% need in order to keep accumulating wealth. At that point, they can try to employ some combination of propaganda and force to stay in power. When that breaks down, the balance of the force is restored (sorry, I just saw Star Wars today.) But what happens when the means of production and economic activity is almost entirely automated, and lies in the hands of a tiny minority? What if there is no limit to the force they are able to employ?

Paul Ehrlich

Paul Ehrlich is still worried about population.

To see why, let us suppose that, in 2050, the TAD [“tinker with agricultural details”] goals have all been reached. More food is available, thanks to higher agricultural yields and waste-reducing improvements in storage and distribution. Improved environmental policies mean that most of today’s forests are still standing and no-fishing zones are widely established and enforced. Ecosystems are becoming stronger, with many corals and plankton evolving to survive in warmer, more acidic water. Add an uptick in vegetarianism, and it appears that the global temperature rise could be limited to 3º Celsius.

As a result, the world could avoid famines by mid-century. But, in a human population of 9.7 billion, hunger and malnutrition would be proportionately the same as they are in today’s population of 7.3 billion. In other words, even with such an extraordinary and unlikely combination of accomplishments and good luck, our food-security predicament would still be with us.

The reason is simple: Our societies and economies are based on the flawed assumption that perpetual growth is possible on a finite planet. To ensure global food security – not to mention other fundamental human rights – for all, we need to recognize our limitations, in terms of both social and biophysical factors, and do whatever it takes to ensure that we do not exceed them.

2016 predictions from Inhabitat, or life in the slow lane

The 2016 trend predictions keep coming. Here is one of several collected by Inhabitat.

We are on the cusp of a new movement, one where going slower in an automobile becomes a lifestyle choice for many people. And that changes everything—the car experience, ownership, what it means to drive, even the whole fume equation. A big reason we want to drive fast is to shorten the amount of time we are away from productivity or entertainment. But as autonomous cars become a mainstream reality surprisingly soon we’ll start to see a ‘slow traffic movement’ emerge that will alter both how we commute and how we design our roads and cities. Robotomobiles will be setup as office/living rooms on wheels where we can do a conference call or check in on our social networks. Then the extra 8 minutes of traveling at 45 MPH rather than 65 MPH will seem trivial. We won’t mind the slow lane as long as it comes with a high speed data connection. The result will be roads and driving conditions that are safer and more sustainable. ‘Texting while driving’ will be a non-issue with the added benefit of more survivable low speed crashes (if there are even still crashes). Both our cars, roads and charge will last longer along with reduced impact of going slower. Plus we can infill new fume free energy options likehydrogen fill up or battery swap with less resources by utilizing the ability of robots who can visit fewer & farther stations at 3 AM rather than the many stations needed to support human procrastination. Riders will share cars and either get out and let the car run off to their next chore or park themselves awaiting your next order. This will allow home & parking garages to become extra space re-purposed for recreation, shelter or productivity. The slow lane will be where you get ahead.