Some fluff, some info

topics covered:

People often ask me: Mr. BK of Baltimore, MD, what do you do when you're not pontificating and overintellectualizing? Well, lately, I've been tiling my kitchen floor.

It used to be crappy linoleum, and Ms. DH of Ann Arbor, MI had asked me if she could do something decent with it. She had done several small-scale mosaics in the past, and so had the experience with tile and the enthusiasm to do something better with my floor than linoleum. It turned out that this was a bit larger of a task than she had expected; most notably, she had not thought to lay the backer board which needs to go under the tile---not until we had already spent two days ripping up the linoleum. The floor now consists of the subfloor, the plywood on which the linoleum used to sit, a layer of cement, the backer board, another layer of cement, and then the tile. By the advice of a friend who is a professional in these matters, we didn't lay backer board in the bathroom, which gives the bathroom a centimeter or so drop from the hallway next to it. Further, we went with a mixed medium concept: a ceramic tile border, and then slate in the center. The ceramic is about 3 mm thick, and slate is about 6 mm.

What I'm getting at here is that it's very much a creative, multi-level experience. There's a border of blue tile, which spills into the bathroom (which is all blue), and collects in pools around the edges. Floating in the center of this is the island of slate, which is occasionally interrupted by small mosaics of mirror and tile, which have a sort of river theme.

Below are a few a photos of the kitchen and hallway, just before we placed the grout. The grout leaves a dolorous haze on everything, which I'm still trying to get off so it will be photogenic again.

Reactions to the new tile floor have been mixed. First, all but one person either agreed that it's better than the linoleum, most giving me a quizzical look in the way of `why would you ask me such a question; it's so obviously better'. [The one exception, Ms. RK of Silver Spring, MD, is famously negative.] Some thought the color scheme was a bit dark, and a number of people pointed out `it isn't level', which I take to mean `I don't know how I feel about your design decision to have a multi-level kitchen/bath/hall area'. Some thought the mosaics a bit fancy for a kitchen floor: `I'd expect to find this hanging on a wall, not on a kitchen floor.' I'm relieved to say that my roommate unequivocally likes what is now his kitchen floor.

The painted ladies I don't recall how much I'd told you about the house, dear reader, but maybe I should mention a few things. It's a Victorian-style townhouse, which the City of Baltimore tells me was built in 1900. The whole row was clearly all built at once, by a developer who bought three blocks of a street in Baltimore and worked its way down producing cheap houses. The townhouses are clearly much more sturdy than the average McMansion, but they were nonetheless mass produced and cheap---after all, they all share their side walls with their neighbors. I'm sometimes curious whether the rhetoric around these houses a hundred years ago was the same as the rhetoric people say now about mass-produced people storage solutions. Unfortunately, such information is pre-Internet, so I'll never know. In the present day, now that the house has sat in one place for a century, it's become quaint and valuable.

There's a painted lady contest on the street every year. A painted lady, the neighborhood newsletter defines, is a house whose facade is meticulously painted in three colors. I bring it up because most of the people around here like the look and think it raises the value of the house, while I think it just looks butt. The social norm is to paint right up to your property line, which means that if there is a little arch that crosses between the houses, exactly one half will be painted taupe and the other half will be painted purple.

Y'know, I'm failing to indicate what I'm pontificating about here, and I expect that I'll continue to do so for the rest of the essay, so let me just spell it out right here and leave your neurons to make the appropriate links. Everything here is about my favorite econ question, what I would call the fundamental question of economics: where does value come from?

Beauty contest So a few months ago, I'd written about the two beauty contests I'd run in class; I've run a third, and here are the results. On this one, I reported to the students the means and 2/3rd of the mean for the first and second runs. I'd used my Amazon associate account on the class website, and made $25 from selling textbooks to my students, and I made this the prize for this one, so it's not dumbass points but cold hard cash they were fighting for this time.

	1st day	midterm	final
mean	259.54	100.08	66.79
2/3 mean	173.03	66.72	44.53
% of ones	3%	25%	10.3%

As a group, everybody moved forward exactly one step from where they'd been last time: the winning bid was two-thirds of last time's winning bid. The equilibrium is to bid one, and you can see that the class sort of backslid away from believing that everyone was going to play that. 18% of the bids were between five and twenty.

But back to the subject of me, there is the several thousand dollar question: will the tile floor raise the value of the house? This is the beauty contest all over again, since the question is not whether I think the floor looks nice, but whether I think other people think the floor looks nice. In fact, when potential buyers check out the house, they will all have in mind the resale value of the thing, meaning that I need to consider whether other people will think that other people will like the floor.

Ms. RK thought the linoleum worked better because the only safe strategy to selling a house is to make it as boring as possible, removing all features that may indicate creativity. The risk-minimization approach says that only one or two people will like the house more due to a fun feature, but lots of people will be turned off by it. Obviously, the designers of the typical McMansion have taken this advice: those places have only those features which are universally liked, like skylights and giganticness. After all, they're called McMansions because they match the lowest common denominator characteristics of a certain restaurant chain---which had a net income of $1.47 billion in 2003. We may think we're above it, but the lowest common denominator pulls down a lot of cash.

I tend to be less risk-averse myself, and feel that I'm in a different position than the McMansion builders. After all, I have one and only one house to sell. If I turn off a dozen buyers but get two or three who recognize the kitchen floor as a functional work of art, then I'm done.

But this doesn't solve the beauty contest problem: even if people think it's a work of art, they have to think that other people will agree. We have the same problem as before: if they believe that future buyers will be turned off by the floor, then they will decrease their bids accordingly. Since there are going to be so many more buyers who won't get it than buyers who do, the beauty contest reasoning is only going to push sales prices down further.

Notice, further, that many people didn't necessarily hate the kitchen floor per se, but were thrown because it didn't match their expectations. There is the Platonic ideal of the kitchen floor, and it's level and simple and generally pretty boring. It takes cognitive effort to accept and enjoy something that breaks expectations, and further, we generally assume that everybody is dumber than we are. [This has been verified in the lab a hundred times over. Think attribution bias or the Lake Woebegone effect.] So we'll assume that others are less likely to be able to exert whatever cognitive effort it took us to decide we like it---I've already committed this presumption above, and every buyer will probably do the same. The Lake Woebegone effect conspires with the setup of the beauty contest to push us to conform to expectations.

So why'd I do it? I was at a gallery opening at which a friend of a friend had two paintings on display, and the curator offerred a few pieces of advice to a gathered crowd. Never buy from a gallery in an expensive part of town, never buy from dealers who push the investment value of the piece, and more generally, the only reason to buy a work of art is because you like it. In the context here: forget the beauty contest, and go with what you deem to be beautiful.

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I don't want to imply that it's just about my kitchen floor. [The sudden start should indicate to you that this one won't make sense unless you've read the last item.] There are much more significant things at stake here. For example, black folk lower housing values.

Why? Because, academic studies show, people really are fucking racist. Emerson et al [1] called 1,663 white folk, and asked them about their choices of home. Their focus was race, but they tried to bury race under a long list of other issues: school, race, recent changes in property values, crime, the relative value of your house vs the neighborhood average. It hurts how unsurprising the results are: controlling for those other factors, a primarily Asian neighborhood had no significant effect on choice (a one SD downward shift), a primarily Hispanic neighborhood had no significant effect (half an SD upward), and a primarily black neighborhood had a way significant negative effect (five SDs down). People who currently live in a hispanic neighborhood are more likely to be OK with living with hispanics, and similarly with blacks.

I could find you more citations about how people are fucking racist, but this is one of those deals where academics just confirm the obvious.

[In non-confirmatory news, I'm told that the white flight thing is a bit mis-stated. You don't have to believe me on this one, `cause I don't have a citation and am not in the mood to look it up, but whites are not more likely to move out of a neighborhood that's become racially mixed. However, new residents are more likely to be minority, meaning that in a few decades, the natural turnover makes it look like white flight.]

Back to the beauty contest: say you're not a racist. You were bit by a radioactive chameleon and are no longer capable of perceiving people's race in any way. But you're still familiar with Emerson et al, and you know that 51% of the country voted for Dubya. As you go house shopping, you do the calculations on the value of a proposed house in a black neighborhood, and you have no choice but to take into account the fact that you're likely to get a lower value for the house when you sell. As long as there are some racists in the market, everyone will price in a racist manner.

Now say that radioactive chameleons secretly sweep the nation, and one day everybody wakes up color-blind. You don't know this, so you still believe that others are racist, and so you will still value the house less. Maybe I overstated the level of racism in Emerson et al's survey: maybe the respondents are not fucking racist; so long as they believe that others are, they may still value a house in a black neighborhood less.

The same is true everywhere that people can agree on dumb assumptions. If we read in books that there are people who think that women are less productive because they're always birthing babies, then it makes sense to offer a lower salary to women. If you know others are offering a lower salary to women (even if you've entirely forgotten the reason why), it makes no sense for you to offer an above-market salary.

Value-by-fiat, or the destruction of value by fiat, is a coordinated equilibrium: when everybody sees the female signal, everybody knows to offer a lower wage. This is indeed a proper Nash equilibrium, where nobody has an incentive to defect.

I'm frankly not sure about the policy implications for housing. But it makes for a tough row to hoe for a black person: if you buy the same house as a white guy, it'll have less value because you're you. What is likely to be the number one largest and most significant investment you ever make just won't get as high a return.

For employment, this is a solid justification for overhiring those who have traditionally been discriminated against---affirmative action. As long as there are racists or sexists anywhere, minorities and women will be paid less, and the market will not correct this. Shifting people out of a bad equilibrium is one of the roles of government; in this case it does so by breaking the significance of the signal used for coordination. Under a proper AA regime, people won't know if others are offering a lower wage when they get the `girl' signal, so it is not necessarily optimal for them to also offer a low wage.

In the mean time, there are still racists and sexists out there who will continue to offer a lower wage just on principle, meaning that even if the affirmative action regime is correctly implemented, there will still be pressure to shift back to the discriminatory coordinated equilibrium.

@journal{citation1,
author="Michael O Emerson and Karen J Chai and George Yancey",
title="Does Race Matter in Residential Segregation? Exploring the Preferences of White Americans",
journal="American Sociological Review",
volume=66, number=6,
month="December", year=2001
pages="922--935"}
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48.7% of survey respondents said they blog as a form of therapy. Me, I'm primarily here to improve my writing skills (28.7% of respondents) and because much of the information I'm presenting isn't easily available elsewhere on the web (3.3%, more or less), But last episode, that was therapy---a means of asking myself where I want to focus in begging for my next contract. The conclusion is that I have a clear, strong preference for places that report confidence intervals. I want to remain on the scientist side of things, rather than the businessy managerial side of things. But this means that I'm choosing to put a limit on how pleasant my life will be, and how much I'll get done between now and when I shuffle off this here mortal coil.

I am good at inventing structures. Give me a topic, a blank page, and an hour, and I'll have a structure and meaning for ya. In such a manner, via black marks filling a blank space, I've produced a dissertation, a book or two, 145 blog entries, a stats library, assorted models of reality, stuff.

I am bad at inventing social structures. Doing so is a two step process: first, one must invent the structure, which I've just bragged that I'm good at, and second, one must convince others that the structure is valuable and worth working toward, and this is something I am supremely bad at.

There are a number of problems at hand here. The first is what I'd kvetched about before and above: I want confidence intervals, and think that people who have absolute certainty in anything (including their theology, by the way) are lying either to me, themselves, or both of us. But obviously, most of the world takes confidence at face value, and feels funny about Bayesian ranges.

The second is just that I'm crazy. People aren't looking for any old meaning, they're looking for meaning that makes sense to them and internally resonates and makes them feel better. Again, I ain't getting nowhere here. The `how can I possibly dilute my artistic vision' sentiment is honestly not very strong in me; it's more dominated by the `I don't get what everybody else is getting at' sentiment.

Life is a lot easier for people who think like everybody else but just a little faster or further. We like to characterize famous innovators as, um, innovative, but upon scrutiny of the work of all but the most exceptional, if you've heard of them they probably made an incremental improvement. Newton really did just stand on the shoulders of giants. It's not just whether your way of thinking is objectively superior, it's also a question of how many people will adopt it, and people just have limited tolerance for anybody who says `hey, let's try everything in a whole new way!', because 1) it takes effort to think like them and 2) for every person who thinks in a whole new way and makes the world better, there are fifty who think in a whole new way to everyone's detriment.

Have personally been working on this aspect a lot lately. Every time I write a paper, I interrogate the paper to work out how I can make it as boring as possible. How can this paper be turned into a minor, incremental, obvious extension of the existing literature?

But for the sort of reasons above, any hopes I may ever have had about working with lots of people, instead of just sitting solitary at a computer until I go blind, are fast diminishing. Somewhere, back in the mists of my life, I decided to focus on learning stuff---math, machines, et cetera---instead of learning how to better organize other people who have learned stuff, and at this point it'd be a long haul to turn around years of bad habits.

Why, you ask, would I want to become a manager-type despite my obvious bias against? First, there's the simple fact that most of what is worth doing is too big to be done by one person. Apophenia will never become a full-featured library unless it gets contributions from others. I could write a dozen books about how software patents are dumb, but it does nothing for the fact that they're law; fixing that takes organizing people.

Then, there's the reason we all have but most of us won't admit to: we want to be rich and famous.

Rich: Ms. DH of Ann Arbor, MI, points us to Morris & Western, who point out that: "[at the end of the century,] the earnings for professionals in technical/scientific fields stagnated, even in professions closely tied to technological innovation... During this same period earnings increased by 34% for all occupations in the category of office work, an increase that was driven by the nonscience, nontechnical business professionals and managers..." (Citation below). That is, as much as we may praise Mr. Einstein (and see below on that), our modern scientists aren't necessarily seeing the cash money that their counterparts in the insurance industry are seeing. You're still much better off, security and cashwise, using your time and brains for managing an office than doing original research.

Famous: as for those physicists with Nobel prizes, they're a back seat to the real prize---the peace prize---which rewards successful organizational and managerial effort. Even among the big-name celebrities, like the lead singer of your favorite foursome or the biologists who run the most innovative labs, the ratio of personal talent to persuasive talent is often low. You can go through your day's newspaper and count two managerial and organizational celebrities for every one individual innovator.

Sure, there are certain rewards to being talent (to use the Hollywood term). You get to stand outside of class in a number of important senses, and will still be invited to the fancy parties, and get to turn your nose at those mere managerial types, but life will never be as easy for the scientist as for the scientist's manager.

@article{morris:western:inequality,
author = "Martina Morris and Bruce Western",
title = "Inequality in Earnings at the Close of the Twentieth Century",
journal ="Annual Review of Sociology",
year=1999,
volume = 25,
pages= "623--657",
url = here
}

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