Monday, February 9, 2015

Sam Peltzman on World Cup Skiing

That's Bode Miller last week in Beaver Creek, CO, not me.  Looks like he could use an airbag.  The thing is, skiing airbags exist, but no one will wear one.

In this New York Times story, Marco Sullivan, U.S. Olympic skier notes "If you're the only guy wearing it, it's probably a disadvantage as far as speed goes."  In fact, the author notes less than a second separated gold from 12th place.  Six one-hundredths of a second separated gold from silver.

Sam Peltzman earned his fame demonstrating that seat belts made drivers faster and more reckless. They compensate for their increased safety.

I am far from a skiing expert, but I have to imagine that the marginally faster/more reckless skiing due to wearing the airbag more than makes up for the weight differential, and just might make up for that 0.06 seconds for second place.

Thursday, May 29, 2014

The Ultimate Short Volatility Trade

My mother-in-law has a magic nose.  She diagnosed a gas leak in our main feed into the house in 2009 that the "electronic nose" the PSE&G guy carries took an hour to find.  So, when she arrived tonight and announced she smelled gas, I called the emergency hotline.

Tuesday, April 22, 2014

Flash Bubbes: An Ebay Revolt

My mother-in-law (or Bubbe, to my kids,) takes ebay very seriously.  Anyone in the family needing to sell must run the gauntlet for her to consider risking her reputation on an item.  She won't let you photograph it yourself.  She won't let you ship it yourself.  But, if you sell with her username, you have instant credibility.

However, when it comes time to buy, what does she advise? Turn to Michael Lewis' villains, the high frequency traders.  The guys who throw massive computing power and light speed technology at their trades.  She never buys without a "sniper"--that's ebay lingo for a high frequency trading operation.  You tell them your limit price.  They take care of the bidding.  They place orders for you, at the tail end of auctions.  The more you pay, the longer they'll wait.  They virtually guarantee shaving a few bucks off that singing fish.

Friday, February 7, 2014

Doctor Sends Economist To ER With Heart Attack!

In this Op-Ed in the New York Times, Robert Hoffman of NYU's Langone Center writes in support of easy access to Naloxone, the antidote to heroin overdose. I'm inclined to agree with him, but his argument relies not on data, but on reductio ad absurdum, and the something isn't absurd.

Specifically, he writes:
Some people might argue that the widespread distribution of a safe, effective and inexpensive antidote might actually encourage drug use. But that’s like suggesting that air bags and seatbelts encourage unsafe driving. Naloxone is a public-health method of intervening when a life is in the balance. Its distribution is endorsed by the American Medical Association. (emphasis added.)
But, as ANY economist will tell you Sam Peltzman is famous for the way he dresses and demonstrating that seatbelts encourage unsafe behavior!!  As I too often want safe cab drivers in New York City?  Replace the driver's airbag with an ice pick.

 I can almost guarantee Naloxone availability will lead to more heroine overdoses, but that's no longer fatal, so who cares?  Will Naloxone lead to more heroine use? Two issues here:

Will a current heroin user consume more?  Probably...the price of over-consumption drops dramatically from "death" to "nasal spray". But, that's the point! Hoffman wants to protect those consumers of heroin from accidental death.

Will non-heroin users become users? I have not used heroin.  I cannot say my risk of death from overdose has ever crossed my mind.  Is that risk what stops you from using heroin?

Monday, October 28, 2013

Gay Couples? What Are The Odds?

In this Huffington Post piece, an antique photograph collector explains that he believes he has a special collection of photographs of gay couples from bygone days.  He even blogs about it, but I won't include the link because it doesn't seem to work.

Jeffery Gent is passionate about what he does.  The article quotes him saying "Unfortunately, so many of these photos were purposely destroyed by horrified family members..." He continues "For every photo that I may have mistakenly identified as gay, thousands more were burned or torn into pieces to keep a family secret..."

To those who hated college statistics, it may not be obvious that we can examine this one pretty easily.  To those of you who hated college statistics and passed the class, remember, you performed no worse than I did.  (D in undergrad stats.  You can only imagine what now Nobel Prize winning Lars Hansen, my dissertation adviser, said when he learned this.)

We'll attempt to apply Bayes Law to see what we might know about the probability that anyone in these images is gay.  Bayes Law is a great tool for drawing statistical inferences.

Where do we start?I'll formulate an answer so you can easily play with a Bayesian calculator on your own.

What is our hypothesis? The image shown portrays two gay men.

What is the data? The data is a picture of two men.

We want to know, conditional on the existence of a photograph, the probability that the picture depicts two gay men.

What is the unconditional probability an image of two men is of gay men?  This is somewhat arbitrary (and political, potentially.)  So, let's say 20%.  It doesn't matter much.  We could say that number is high (or low) for the total population of men.  We could say that number is low (why do two straight guys get photographed together?) We could say that number is high (Don't many brothers appear in photographs together? Grooms and best men?)

The key, really, is the the claim by Gent that most photographs of known gay couples were destroyed by family and friends out of a desire for secrecy.

Images are gone for two reasons: Passive loss (accidental disposal, fire, time) and active loss ("We're small minded, bigoted people who are ashamed, so we are destroying his memory.")

We need to establish the probability that a picture exists today conditional on straight men in it, and the probability that pictures exist today conditional on gay men in it.

Suppose 50% of all images are lost passively, but that a further 25% of gay men images are lost actively.  This is incredibly conservative based on Gent's statement.  We're saying only 50% of known gay images are destroyed actively.  He's implying the vast majority.

So, in our calculator, we have Pr(Image Exists | Gay) = 0.25 and Pr(Image Exists | Not Gay) = .5.

What's the result? Pr(Gay | Image Exists) is about 11%. 

If the vast majority of images depicting known gay men were destroyed (a la Gent) and we set Pr(Image Exists | Gay) = 0.01, then it is virtually impossible that any of the images depict gay men.

Even if most of the images taken historically were of gay men (90%) and the spiteful relatives destroyed 99% of them, it remains the case that only 15% of surviving images depict gay men.

Nice collection of old pictures, though.