Half Changed World

This week’s book is Predictably Irrational, by Dan Ariely.  It’s a quick read, but has far reaching ramifications.  It’s about how people aren’t as rational as economists think we are.  That’s not particularly surprising, but Ariely goes on to argue that people are irrational in systematic– predictable — ways, and to explain the elegant experiments that psychologists and behavioral economists have developed to tease these out.  So, let’s look at some of the examples:

• People are hugely biased for the idea of getting something for "free."  They’ll take the crappy thing for free over the good thing for a modest cost.

• People don’t know what things are really worth, and so anchor to arbitrary comparisons.  People often won’t buy the most expensive thing on the menu, but they’ll buy the next most expensive thing.  I was particularly impressed by the studies that showed that if the researchers asked people if a percentage was higher or lower than the last two digits of their social security number, and then had them guess at a concrete number, there was a strong correlation between the guess and those last two digits.  Based on this, I’d guess that including a high "buy
  it now" price pulls up the value of bids on ebay, even when no one uses
  the buy it now option.  (Although I don’t know if it would pull them up to offset the increased fee.)

• When you ask people to choose among three things, two of which are similar (but one is clearly better than the other) and one is very different, they’re more likely to choose the better of the two similar choices.  It’s hard to tell if an apple is better than an orange, but a fresh apple is clearly better than a rotten apple — and the presence of the rotten apple stand out against the orange.

All this isn’t just entertaining, but has pretty significant policy implications.  Orthodox economists — for all their pessimistic reputation — actually tend towards a Panglossian view of the world — that we’re in the very best of all possible worlds, or at least that the world couldn’t be made better for anyone without making it worse for someone else.  This is because economists take pretty seriously the idea of revealed preference: the idea that you can tell what agents in a free market prefer by what they chose, given the options that are available to them.

Ariely more or less blows up this idea, by showing studies where given choices A, B and C, no one chose option B, but taking away option B dramatically changes the distribution of choices between A and C.  The bad news is that this means that lots of people are making suboptimal choices all the time; the good news is that it means there’s room for improvements without making anyone worse off.  The problem is that there’s a lot of resistance — for good reasons — to having public institutions adopt the strategies of direct marketers…

Somewhat related books that I’ve read recently:

• Discover Your Inner Economist, by Tyler Cowan (of Marginal Revolution).  While Cowan is much more of a traditional economist than Ariely, I’m not sure you’d be able to tell that by this book.  Cowan’s big take-away here is that economics is about scarcity, and so the key is always to figure out what’s the resource that’s scarce (and it’s often attention or time, rather than money).
• Your Money and Your Brain, by Jason Zveig.  Specifically focusing in on why we behave irrationally when it comes to investing.  I thought the first chapter or two was fascinating, but then it got repetitive, and I didn’t finish the book before it was due back to the library.  Maybe a good one to give to your brother who thinks that he’s figured out a way to beat the markets.

When I posted about whether young people are "falling behind" their parents, almost all of the commenters agreed that a big part of the reason that even relatively affluent young adults *feel* poor is that homeownership seems so out of reach (even with the declining market).  This made a lot of intuitive sense to me.

But my dad then sent me a ton of Census data on homeownership rates by age, going back to 1982.* (Yes, I come by my geekery honestly.)  And his point is that households under age 35 were just about as likely to own homes in 2008 (41.7 percent) as in 1982 (41.2 percent).   Homeownership rates for this group hit a low of 37.3 percent in 1993-1994, and then rose to 43.1 percent in 2004, before falling off slightly.

So how is it possible that homeownership can feel so out of reach to almost everyone I know, even as the homeownership rate didn’t decline at all?  Well, part of the answer is that I live in an expensive housing market, so the "everyone" I know is a biased sample.  (The readers of this blog are more diverse, but I think are still disproportionately living in large urban areas, compared to the country as a whole.)   Also, a whole lot of condos were built in the 1990s, so if by "homeownership" you mean "owning a single family detached home," the homeownership rate probably did decline somewhat.

But it’s also true that a lot of people — at all age groups — bought homes only by extending themselves to their limits.  There was this credit bubble that you might have heard about… (Supposedly in 2005, half of all loans made in DC were interest-only.)  And there was this dreadful fear that if you didn’t jump in right away, even if you couldn’t really afford it, you’d be priced out forever.  So, the people who didn’t buy houses felt like they were falling behind because they couldn’t afford a home, and the people who did felt like they were falling behind because they couldn’t afford anything else.

*The Census table is only online as a text file — if you want my Dad’s Excel spreadsheet, I’m happy to send it on.

All week, I’ve been blinking away tears as I read or hear the news.  This morning I turned the car radio from NPR to the classic rock station because I just couldn’t cope with listening to the story about the middle school that collapsed in the earthquake in China.  The disaster in Burma is even bigger, but because the government isn’t letting aid workers in (let alone reporters), there aren’t the first-person stories that tug at the heart.

This NY Times story suggests that the grief of the Chinese parents is made worse by the fact that the one-child policy means that most of the dead children were their parents’ only child.  I’m not sure I believe that — I don’t believe that the grief of a parent of two children is cut in half when only one child dies, or the grief of a parent of five is only one-fifth.

I — and most (if not all) of my readers — am lucky to live in a time and place where the death of a child is a rare tragedy.  At other times and places, it has been less rare, but no less tragic.  Reading 18th and 19th century diaries, it  is quite clear that the frequency with which children died of disease did not diminish the pain felt by those left behind.

But even here and now, we are never entirely safe.  Last week I learned that the son of one of the women on the birthmonth email list I joined when pregnant with D was killed, along with his grandfather, in a car accident.

While the presidential primary grinds its way to a conclusion, things are heating up here in Virginia’s 11th Congressional District Primary.  Tom Davis isn’t running for re-election, and the district is widely believed to have high potential to swing Democratic.  Leslie Byrne and Gerry Connolly are slugging it out, with the primary coming up on June 10th.  We’ve gotten something in the mail pretty much every day this week, with people coming door to door as well.  (And this is a hilly neighborhood — the canvassers looked like they hadn’t quite realized what they were signing up for.)

The campaigns have released competing poll results, each claiming that they’re way ahead of their opponent.  I don’t know what the truth is, but I can say that in the campaign literature I’ve received, Byrne’s name and face are clear on the outside, while you have to open up Connolly’s to see who it’s from.  That makes me think she’s got the advantage. 

This week I’ve got a video review instead of a book review.  This is actually one that a PR company sent me as a review copy, but then I didn’t get around to watching it for over 6 months.  Oops.  51 Birch Street is an autobiographical documentary about the filmmaker’s parents, and how after his mother’s death and his father’s swift remarriage, Doug Block discovered that their relationship was a lot more complicated than he had believed.

The inevitable comparison is to Capturing the Friedmans, because of the use of extensive home video footage.  But unlike the Friedmans, the Blocks don’t have a deep dark secret.  The surprise for Doug Block is that, as he reads his mother’s diaries, he discovers that she was deeply unhappy in her marriage, and that during the 70s she had an affair.  Not exactly earthshattering.  But what makes the movie compelling, although deeply sad, is that as Block shows more and more of the family footage, it becomes increasingly obvious that his mother wasn’t exactly hiding her unhappiness.  And yet, although Block opens the movie by saying that he and his mother always had a special connection, he was clearly blind to it.

My take-away from the film is that when Block says that he was close to his mother, he means that he was able to talk with her about himself (as contrasted with his father, whom he had difficulty talking with).  It doesn’t mean that he was able to listen to her, or to see her as a person separate from her role as a mother.  That’s probably pretty common, but I found it sad.

Via an article in the Washington Post, I recently found a food blog called The Perfect Pantry.  I particularly like the recurring feature called Other People’s Pantries, and intend to submit mine soon. 

The process of unpacking our supplies into the new kitchen did make me aware of just how many spices, oils, etc I’ve accumulated.  Sometimes it’s because I try a new recipe that requires a new ingredient, but as often it’s because I see something interesting in the Asian grocery and decide to give it a try.  Unfortunately, given the constraints on my time, I’m afraid that buying new ingredients is as likely to be a substitute for cooking as an inspiration…

This recipe for Clean the Freezer Chili inspired me to make a batch of chili myself, with the rule that I could only use ingredients that I had on hand.  I don’t stock tempe, so I used bulgar cooked in canned crushed tomato as the base.  I had an open jar of mole sauce, so that went in. What else?  Black beans, ancient sun-dried tomatoes, veggie stock, green peppers, fresh tomatoes, onions, celery.  Chili powder, cumin, paprika.  I thought the result was just ok — a bit too salty for my taste, but T. liked it, and thought it was surprisingly "meaty" for veggie chili.

Happy Mothers Day to all, and a particular prayer for children who have lost their mothers and mothers who have lost their children.

My mom’s been busily trying to give things away to reduce the "stuff" in her life, and so asked me to make a contribution rather than buy something for her.  In case you might be similarly inclined, here are two organizations that seem appropriate:

• UNFPA — the United Nations Population Fund.  They support contraception, maternity care, fistula repair, and HIV/AIDS prevention.  The Bush Administration has refused to release congressionally appropriated funds to UNFPA since 2002.

• UNICEF — the United Nations Children Fund.  They’re collecting money for relief in Myanmar/Burma right now, but it’s probably more useful to donate without restriction, and let them decide where it’s most needed.

Just wanted to give a heads up that HR 5781, which would provide federal employees with 4 weeks of paid parental leave, is headed to the House floor for a vote next week.   (If you read the bill text at that link, it will say it’s 8 weeks of paid leave, but it was cut to 4 weeks in committee.)  Outside of the DC area, this probably hasn’t gotten much attention, so it’s worth dropping your Representative a line to encourage support.

I used to be a fed, and lots of people were shocked when I told them that I didn’t get any paid maternity leave.  The feds generally provide good benefits, so everyone assumes that they provide parental leave.  They don’t — and they don’t have any sort of short-term disability program, either — although you can use any annual leave (vacation) or sick leave that you’ve accrued.  The problem is that while long-term federal employees often have months and months of sick leave accrued up, most of the people who have babies aren’t long-term employees (since the federal government hires very few 12 year olds).  By hoarding my leave days carefully, and working up to the day I went into labor, I was able to take 12 weeks off with pay when I had D.  When I had N, less than 3 years later, there was no way I could have saved up enough leave — and I was better off than most second-time parents, as T was staying home with D, so I didn’t have to use up sick days when he was sick.

So, this bill both makes parenting significantly more manageable for federal employees, and also puts the federal government on record that parental leave is important.  And it even has a chance of being passed in both Houses.

This week’s book is Life Work, by Donald Hall.  When I agreed to review The Ten Year Nap, the blog tour organizers sent me links to some resources, including a review that said: "In fact, the novel, like poet Donald Hall’s memoir "Life Work," is a
passionate paean to the redeeming power of purposeful occupation."  This sent me off looking for Hall’s book.

Life Work is a short book, really just an extended essay.  In unfussy but eloquent prose, Hall writes about his daily routine, and connects it to the lives of his ancestors, in particular his maternal grandfather, in whose house he lives.  For him, contentment is "work so engrossing that you do not know you are working," what others might call "flow."  He writes about waking up in the morning, wondering if it’s close enough to 5 am that he can reasonably get up and start working on his poems.  He criticizes the idea that only what is paid should be considered valuable.

Hall writes with love about his ancestors, and their work, especially his grandparents who were farmers in a time and place where farmers could still do a bit of everything — raise cows for dairy, chickens for pullets and eggs, maple syrup, enough vegetables to eat year round.  Except for buying store-bought cloth, their lives were closer to the prototype of the Ingalls family than to modern farmers.  And he contrasts them with his father, who spent his life doing the books for his family’s dairy business, and hating every minute of it.

I still can’t decide whether I believe that Hall’s grandparents were as content with their lives of unremitting labor as he makes them out to be.  He writes that his grandmother had planned to be a medical missionary until her mother died, and then she set all those plans aside to keep house for her father and later her husband and children, without a word of complaint.  I think there’s a difference between being not unhappy and being happy, and it’s hard to know where they would have fallen.  And for all of Hall’s romanticization of his grandparents’ lives, he doesn’t have any interest in taking up farming himself, unlike his friend Wendell Berry.

In any case, it’s a lovely little book, filled with Hall’s love for his work, his wife, and his family.

I’ve got a delightful little book that I want to blog about, but tonight’s not the night.  I keep hitting refresh on CNN, but the percent counted doesn’t seem to have gone up in the past hour…