Author Archive

It beckons.

January 20, 2009

The most powerful symbol in my life:




The (1) calls seductively from the taskbar.  Such promise.  Such mystery. It must be revealed. Without hesitation.  Stop what you are doing immediately. Find out what lies behind the  (1)?

(How does one kick a gmail addiction?)


Left behind by Moore’s Law

January 10, 2009

Technological progress evokes images of log-scale charts shooting up into infinity.  Your smartphone is roughly 100 million times more powerful than those  room-sized computers of the 50s. These guys can sequence your genome for $5k.  The first genome cost, completed 5 years ago, cost $2.7 billion!

It is also worth  noting there are plenty of areas that have seen little real (net) progress in the last 50 years.

– Air travel: Average flight times between cities have been increasing over the past few decades.*

– Road travel: No faster than it was 50 years ago. This is clearly due to population pressure but has not been offset in any meaningful way by technology. Speed limits still 60MPH on open highway.

– Restaurants and bars: Haven’t materially changed the way they operate since the invention of fast food.

– Homes: Aside from the wiring that runs throughout and perhaps the materials used, does a home look or function substantially differently? Are homes as good as they will ever get? I doubt it.

Why is this? Smells like opportunity to me.

* Thanks ZKD.

Social Engineering: Mystery Guest Events

December 21, 2008

Market failure makes me sad. Surplus stolen. Transaction thwarted. As Pareto would say: “Inefficient!”

There are few more persistent market failures I can think of in my daily life than social interaction. I like meeting new people. You like meeting new people. But…. put us in the same room and chances are we won’t meet.

Why not?

Say we are at a party standing on opposite sides of the room. There are three reasons we WON’T talk to each other. Let’s call these the “Three Why Nots“:

Why Not 1) Randomness: Do I want to meet this person? Is this person actually worth my effort?
Why Not 2) Uncertain intention: Does that person want to meet me / anyone?
Why Not 3) Initiative: One of us has to “make a move”

In economics language the first two “Why Nots” are instances of information asymmetry: Each party not knowing exactly what the other is offering and what the other is seeking. The third Why Not is an example of a transaction cost: The “transaction” of us meeting incurs a cost of one of us having to introduce ourselves, which causes discomfort.

Transaction costs and information asymmetries are well-established culprits in causing market failures. But fortunately, economists have devised a few ways to overcome these barriers. I have become increasingly interested in using social engineering and the economic principles of “signaling” and “screening” to devise ways to vanquish the Three Why Nots. Here’s one example (also see Building a Better Bar).


“Mystery Guest” Events: Using signaling to overcome informational asymmetries and reduce transaction costs. I will describe two below.

(Like most edgy / genius ideas, this one came from Julia N.)

The Mystery Guest Dinner went like this: Julia, a third friend and I (the Hosts) each invited one friend that the others do not know (the Mystery Guests). The six people have a meal out. Each person either meets 2 or 4 new people that night.


The Mystery Guest Mixer went like this: Julia and I each asked 5 -7 of our friends that the other did not know (the Agents) to invite 2-3 of their friends (the Mystery Guests) to a wine cocktail party in my apartment. The result is a room full of people who know at most 4 other people (hosts excluded), but everyone knows at least one.



The elements shared by each event are a) no one knows anyone, b) everyone KNOWS that everyone wants to meet people, and c) each guest is hand-picked.

Let’s look at how these events help weaken the “Three Why Nots”

“Uncertain Intention” is easily overcome by d). Everyone in the room is there with the same intention and, just as importantly, everyone is aware of that fact. Compare this to a bar where a fraction of people are there to meet others and it is difficult to identity who is and who isn’t.

“Randomness” is also somewhat blunted by the invite-only premise of the event (c). You are maximum 4 degrees of separation from anyone in the room. And there is a strong social incentive to bring fun / cool / interesting / compatible Mystery Guests. Chances are good the Mystery Guests are worth your time.

“Initiative” is forced by a).There is no one to sit in the corner with! You have no choice but to talk to others. And it’s easier to meet others when everyone else is doing the same.

Overall, the events were a success. Everyone enjoyed themselves and I would guess most still have contact with at least one person they met that night. Compare that to your last night out in the Meatpacking.

Reader, I ask two things of you. Comment / email me more ideas to outmaneuver the “Three Why Nots.” And also email me if you want in on the next Mystery Guest event.

Recent random thoughts

December 2, 2008

1) I’m thinking about trading in my wardrobe for a set of custom-made commemorative t-shirts. Each would have an event and date written on the front (i.e. “Invisible Hand in Your Pants Launch”) and a commemorative quote on the back: (i.e. “The world is now grooved“). Every day wear a different shirt, fondly remember an event in your life, and start a conversion about it with someone. Then send your regrets to Banana Republic.


2) People do a really bad job retaining information and ideas. I craft brilliant speeches in the shower and have forgotten them by the time my pants are on. For every 10 interesting articles I read, I remember fewer than 2 a week later. Three ideas to better retain and capture information: 1) Keep a running list of ideas or interesting stuff on your computer and sync it to a Google Doc in the cloud.  The act of writing it down and an occasional scan is enough to keep it in your mind 2) Get voice note software on your mobile device to record those fleeting ideas as they come 3) If you must be old school, carry one of those reporters notebooks around everywhere.

3) What would you do if you had 2 months off from work (voluntary or otherwise)? If you can’t answer that question you need to take a day off and do some self-reflection.

4) Not to get all Tyler Cowen on you, but here’s a sentence to ponder:

Given that human beings are invariably diverse and that the knowledge at thier disposal is invariably limited, it would seem to follow that even societies in which unsophisticated people obey rudimentary rules will produce surprises and discontinuities — events that cannot be foreseen either through intuition or through the more conventional sorts of social science.

It’s from a thoroughly rewarding article that Catherine sent along here. The most famous example is the Schelling Model that predicts that even non-racists will still form segregated neighborhoods.

5) “Heisenberg was here… maybe” is the best piece of bathroom graffiti I’ve seen this month.

6) The fact that Chicago mantains a large human population in spite of the weather is a giant testament to how great the city is. San Diego would be abandoned within a month it were in the plains.

Instead of a $25 bn bailout …

November 21, 2008

… of the auto industry, how about a $25 billion Treasury-managed automotive venture fund?

The new ventures would claw back some of the jobs that Detroit is shedding. And it would position the US as the center of 21st century automotive technology and innovation.

And, hey, if GM/Ford are indeed the best recipients of capital for innovation (especially green innovation), as some of the bailout supporters claim,  they would still win the funds. But they are probably not, of course.

Seth Godin agrees, I think.

The Why

November 16, 2008

Just spent a day doing college interviews, which is consistently enjoyable in aggregate if not always for each particular interviewee. 

I am the interviewer that the good candidates love and the bad candidates hate. I revel in asking the tough questions far from a candidate’s comfort zones and seeing them squirm — forcing them to engage their own minds in something they’ve never thought about. That’s where you learn who’s a thinker and who’s just well rehearsed. Those who play ball and lean closer when answering are the ones you want to admit and will become dining hall and seminar all-stars. Those who are uncomfortable and tense up get the red stamp of disapproval. One question from today that helped draw that line was:

What is the single worst thing about our world?

And then when they think they are in the clear:


I was sitting on my high throne of interviewer invincibility when a particularly sassy girl fired back at me: “How about you? Can you answer that?”

Oh shit


“I ask the questions here, Lady,” I respond half-jokingly.

But she pressed on and I was forced to run my own gauntlet. My answer was a jumbled mess. A surefire ding if I was in her shoes

Consider this post my mulligan.

My answer to the first question is simple: Global poverty. The “why” is what I want to comment on here.

The common answer is because poverty causes suffering – and that’s certainly a good one and plenty sufficient to take action. My real reason is a tad more selfish.

(With few exceptions) the extreme poor don’t contribute. I’m not talking about the poor in the US. I’m talking extreme poverty, primarily subsistence farming in rural areas.

They don’t invent. They don’t govern. They don’t write books. They don’t produce art. They don’t innovate in a way that matters for the rest of us. They don’t make the wider world a better place. They may have talent – but it’s wasted and ground down in the fight for subsistence. This is the real tragedy. Wasted human potential down the drain, and with it, a better world that could have been.

This is the topic of one of my favorite poems – Thomas Gray’s “Elegy Written on a Country Churchyard.” Standing over the buried dead in a poor rural graveyard, Gray laments and marvels at the wasted potential. The following stanzas in particular drive straight to the point:

Let not Ambition mock their useful toil,
Their homely joys, and destiny obscure;
Nor Grandeur hear with a disdainful smile
The short and simple annals of the Poor.


Perhaps in this neglected spot is laid
Some heart once pregnant with celestial fire;
Hands, that the rod of empire might have sway’d,
Or waked to ecstasy the living lyre:

But Knowledge to their eyes her ample page,
Rich with the spoils of time, did ne’er unroll;
Chill Penury repress’d their noble rage,
And froze the genial current of the soul.

Full many a gem of purest ray serene
The dark unfathom’d caves of ocean bear:
Full many a flower is born to blush unseen,
And waste its sweetness on the desert air.


Some village-Hampden, that with dauntless breast
The little tyrant of his fields withstood,
Some mute inglorious Milton here may rest,
Some Cromwell, guiltless of his country’s blood.

Less than half the earth’s population is included our globalized world. The rest are isolated, taking nothing from us and also giving nothing back. Bringing them into the fold so that their talents can be put to use while simultaneously improving their lot …. 

…that’s The Why.



How to kill the magic of human relationships with mathematical precision

November 13, 2008

My friends are pretty cool. Your friends are probably pretty cool too.

Sometimes I feel like mine are the best in the world and you probably feel the same way about yours.

You probably stop there, move on and continue to enjoy your life. The tragically rational among us stop and realize that’s mathematically impossible or at least statistically improbable.

How can you not be overwhelmed by the number of people you don’t know? Or even the people you do know but have not developed a relationship and past history with?

But then again if you spend all your time meeting new people you never develop meaningful relationships with anyone. Clearly there is some appropriate balance between developing relationships you already have and expanding your social horizons. But how do you find that balance?

Not knowing where the correct balance, we can turn to a mathematical model. To make our lives easier, let’s examine a particular type of relationship: Marriage. The rules are you get to pick one person from the set of people you’ve met (no mail order brides) and can not divorce.

Today’s question: What is the appropriate age to get married (or more precisely pick a partner from the set of people that you already know)? Until what age do you continue to search and when do you … for lack of a better word … settle with the best you have?

I put the rest under the fold because it involves a fair but of math and even some integrals .

For those who don’t care about math, the answer is 50 years. You can stop reading now. For the geeks, onward we go…..


Google: Please index my life

November 1, 2008

One the greatest source of unrecorded, unorganized yet useful sets of information is the movements and activites in one’s life. 

  • Where were you on the night of March 23rd at 7PM?
  • Which bars have you been to in the area?
  • How much time do you spend in my apartment per week?

That data dies when you forget it.

I now know I emailed my college dean  4 times in April 2006, withdrew $60 from my checking account 10/12/2005, searched for “MTA map” on Google last Tuesday.    

Just like Microsoft indexes my mail, BOFA indexes my bank account and Google indexes my searches, I want someone to index my life.  This should be possible with a gps-enabled smartphone.

Does anyone know any efforts in this space? There’s Brightkite — the best of a underutilzied crop of geo-aware social networking iPhone apps. But those are too focused on socialization. I want to know more about myself, what I do, when I do it. I want a life dashboard. I want my personal history to be searchable.

If Google isn’t 2 years down this road already, there’s a big opportunity out there.

To rise like the phoenix every 4 years

October 23, 2008

Words and phrases that will go into hibernation starting Nov 5th and reassert themselves again in 2012

  • “Vet”
  • “Surrogate”
  • “Gaffe”
  • “Hardscrabble”
  • Alternative Minimum Tax
  • Begala


An exercise in symmetry

October 21, 2008

Today’s New York Times headline read:

Kerkorian Sells Part of His Stake in Ford

The move by the billionaire investor Kirk Kerkorian is a sign of slumping confidence in America’s auto industry.


Couldn’t this headline just as truthfully read:


Kerkorian Counterparty Buys Stake in Ford

The move by the billionaire investor Kirk Kerkorian‘s counterparty is a sign of slumping growing confidence in America’s auto industry.


Apparantly the more famous counterparty always determine the direction of the confidence.

Homer Simpson’s line should now read…

October 11, 2008

… “in theory Capitalism works. In theory.” 

What will the economic crisis do to:

1) The age at which we “settle down,” marriage or otherwise? (Jana’s question)

2) The allocation of talent between industries and professions?

3) The rate of innovation, financially or otherwise?

4) Worldwide economic integration?

My initial guesses would be 1) reduce it slightly 2) better align it to the optimal 3) stagnation over the next year, rapid acceleration of the next five 4) further integration as worldwide capital gushes to shore up financial institutions everywhere.

It is not immediately obvious to me that a dislocation and rebuilding of our economic infrastructure is necessarily a bad thing. Although it certainly won’t be pretty in the short term.

Reader responses: BIP! cards

September 30, 2008
Some time ago, I posted an open question about why Chileans keep such low account balances on their subway “BIP!” cards.
Glen and Alisha came back with fantastic responses, each worthy of their own post.
Alisha offers the cultural explanation (so like her..):
I’m sure that Glen gave you some rational explanation, but given that I’m a mere aspiring political scientist, I will give you a more interpretive response:
1)  Chileans love waiting in lines.  It gives them another form of oppression to discuss at work–I waited in line for 10 hours today and finally got on the metro…then I walked 8 miles through the pouring rain and smog after working a 15 hour day (with a 4 hour lunch break).

2) Chileans are irrationally afraid of crime.  Despite the safety of Santiago, they go nuts about crime, especially on the metro.  Maybe they think flashing a 10.000 peso bill will set them up to be pick pocketed (or at least get their Bip card ripped off)??  So maybe it’s strategic (or cool) to look poor among the rich, and then the poor are just poor so everyone gets miniscule sums on their metro cards.

Glen’s response was worthy for publication in minor journals of economics. He shows that it is economically rational for a Chilean to keep account balances as low as 1414 pesos. The full analysis is below — warning: The words “first-order conditions suffice for optimization” do appear. And .. oh lordy … it is glorious.


Thanks Glen and Alisha!

Assorted thoughts on the financial crisis

September 26, 2008
  1. I don’t understand the crisis. You don’t understand the crisis. 90% of the people writing about the crisis don’t understand the crisis (most guilty: Matthew Yglesias). You need a PhD and lifetime of work in finance / economics to understand the crisis and if this isn’t you then you don’t have the answers.
  2. My work mates were discussing whether this signals the beginning of the end for US hegemony.  Startlingly, the consensus was “yes” and no one challenged it. Laura volunteered “can we turn it back or is it too late?” Opinions were mixed. To me the other important question is “as a global society, do we want to turn it back?”
  3. Disruption always creates some chaos. Often it is followed by innovation. Call me optimistic, but I see this spurring a wave of innovation in the financial sector.  Katie sent me a quote: “Every financial system tests every regulatory system to destruction.” The idea that the financial system grows to put pressure on the bounds of the regularity system, requiring a new regulatory system seems very healthy to me. One step back, two steps forward. I hope.
  4. The executive compensation discussion is a red herring
  5. Related to 1) — given that our elected officials (who really have no more of a financial /economic background than you or I) are voting on this, I hope they have some smart advisers. Who is actually crafting these plans? Sure as hell isn’t the Senators themselves.
  6. $700 billion is a cartoonish and meaningless amount of money. Per taxpayer it is a few thousand dollars. We are not going to be sent a bill from the US government though. It will be debt financed like the Iraq War and pretty much everything else. If there was feedback between government apppropriations and tax bills, there might be more appetite for fiscal restraint. As it stands, this has more in common with personal credit card debt or a home equity line.  It feels like free money. If our tax bill went up in accordance to government expenditure (or if the future tax incidence was indicated on our tax form), this would all be more real.
  7. If enterprises are not, occasionally, failing are we being too risk-averse as a society and curtailing our potential economic growth? Occasional failure is probably healthy. Widespread failure certainly isn’t.
  8. Better safe than sorry: I am going to start building an Ark. Anyone selling 15,000 cubits of gopher wood?

Fear not

September 22, 2008

The Invisible Hand in Your Pants will return with a vengeance in the next couple weeks

Apologies for the lack of posting lately. You deserve better and your readership is important to us, even you Jeremy.

– Management

(For now .. find us on Google Reader)

Two questions surrounding receipts

September 7, 2008

1) What do waiters do when a customer adds the tip incorrectly on the receipt? Take the higher value or the lower one?

2) Why is there both a “tip” line and a “total” line on a receipt to begin with?  Isn’t one of those redundant? The tip implies the total and vice versa. Maybe a little arithmetic practice is good for keeping us sharp.