The Babadook pop-up book

Anyone who has seen the critical acclaimed horror movie The Babadook will remember the key terrifying totem at the heart of the movie: a nightmarish child's pop-up book.

Thanks to popular demand (well, at least 2,000 pre-orders) the pop-up book is being produced. For $80, you too can own a copy. Makes a great gift for any new moms in your life (if you see the movie you'll understand)!

Given the low print run, it's conceivable each book could be pre-seared and dropped on your doorstep in the middle of the night, as in the movie.

If this shows up on your doorstep one day, probably best to just cut your losses and move.

Should markets clear?

Steve Randy Waldman asked that question this year, and he raises some great points about what is a generally accepted microeconomics tenet. As a reminder, a market is said to clear where the demand and supply curves meet.

Here at interfluidity, we are not in the business of useless economics, so we will adopt a very conventional utilitarianism, which assumes that people derive the similar but steadily declining welfare from the wealth they get to allocate. Which brings us to our first result: If our single producer and our single consumer begin with equal endowments, and if the difference between consumer and producer surplus is not large, than the letting the market clear is likely to maximize welfare. But if our producer begins much wealthier than our consumer, enforcing a price ceiling may increase welfare. If it is our consumer who is wealthy, then the optimal result is a price floor. This result, a product of unassailably conventional economics, comports well with certain lay intuitions that economists sometimes ridicule. If workers are very poor, then perhaps a minimum wage (a price floor) improves welfare even of it does turn out to reduce the quantity of labor engaged. If landlords are typically wealthy, perhaps rent control (a price ceiling) is, in fact, optimal housing policy. Only in a world where the endowments of producers and those of consumers are equal is market-clearance incontrovertibly good policy. They greater the macro- inequality, the less persuasive the micro- case for letting the price mechanism do its work.

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Let’s consider another common case about which many economists differ with views that might be characterized as “populist”. Suppose there is a limited, inelastic supply of road-lanes flowing onto the island of Manhattan. If access to roads is ungated, unpleasant evidence of shortage emerges. Thousands of people lose time in snarling, smoking, traffic jams. A frequently proposed solution to this problem is “congestion pricing”. Access to the bridges and tunnels crossing onto the island might be tolled, and the cost of the toll could be made to rise to the point where the number of vehicles willing to pay the price of entry was no more than what the lanes can fluidly accommodate. The case for price-rationing of an inelastically supplied good is very strong under two assumptions: 1) that people have diverse needs and preferences related to the individual circumstances of their lives; and 2) willingness to pay is a good measure of the relative strength of those needs and values. Under these assumptions, the virtue of congestion pricing is clear. People who most need to make the trip into Manhattan quickly, those who most value a quick journey, will pay for it. Those who don’t really need the trip or don’t mind waiting will skip the journey, or delay it until the price of the journey is cheap. When willingness to pay is a good measure of contribution to welfare, price rationing ensures that those more willing to pay travel in preference to those less willing, maximizing welfare.

Unfortunately, willingness to pay cannot be taken as a reasonable proxy for contribution to welfare if similar individuals face the choice with very different endowments. Congestion pricing is a reasonable candidate for near-optimal policy in a world where consumers are roughly equal in wealth and income. The more unequal the population of consumers, the weaker the case for price rationing. Schemes like congestion pricing become impossibly dumb in a world where a poor person might be rationed out of a life-saving trip to the hospital by a millionaire on a joy ride.

It's a very reasonable question to ask, especially in today's age, when income inequality is suspected to be as high or higher than ever. Perhaps even more so in the Bay Area, where income inequality is on par with that of developing nations.

And in such conditions, market clearing may not maximize welfare. As Matthew Yglesias notes:

When people say that a price-based scheme for rationing water is most efficient, they mean that prices will deliver the most efficient distribution of dollars and water. The idea is that how much people are willing to spend on something is a good proxy for how much they care about it, or how important it is to their well-being. Different people like different things, but you can buy all kinds of different stuff with dollars, and seeing what people choose to spend their money on tells you a lot about their preferences.

But dollars aren't a perfect proxy for well-being, because money means different things depending on how rich or poor you are. To a middle class American, $5,000 is a really big deal. To a multi-millionaire like Mitt Romney or Hillary Clinton, it's totally trivial — the value of their stock portfolios bounces up and down by that much all the time. To a person living paycheck-to-paycheck with no access to credit beyond very expensive payday loans, $5,000 could be a life-changing amount.

The technical term here is the "declining marginal utility of money." A given dollar produces less happiness in the pockets of a rich person than a poor one. That means that in a society with substantial economic inequality, an efficient distribution of dollars and water isn't going to be the same as an efficient distribution of happiness and water. This is what we're seeing in the North Carolina water case — the dollars are just a lot more important to the poor than the rich, so all the burden of adjusting to reduced water usage falls on them.

The reflexive response when it comes to many folks in tech on issues like Uber's surge pricing and net neutrality is to bow down before the power of the free market, and I count myself generally in that camp. Generally, it is an optimal scheme for efficient allocation of scarce resources.

I'm also generally sympathetic to companies pricing their products according the market. Apple charges a hell of a lot more for its phones than it costs them to manufacture them, but they've earned that surplus by producing a great product that people want. Uber charges surge pricing during certain times and enough people are willing to pay the multiple to get a ride because of the sheer convenience of the experience.

However, let's not blindly accept that it's welfare-maximizing for society without a skeptical analysis. As Waldman notes:

And there are lots of choices besides “whatever price the market bears” and allocation by waiting in line all day. Ration coupons, for example, are issued during wartime precisely because the welfare cost of letting the rich bid up prices while the poor starve are too obvious to be ignored. Under sufficiently high levels of inequality, rationing scarce goods by lottery may be superior in welfare terms to market allocation.

Rage against the machine (that produces the rage)

Love this fantastic Scott Alexander post on why the way the internet is structured/connected today is so conducive to amplifying those issues which most divide us. In retrospect, it should be no surprise at all that 2014 was a peak year for outrage, and it's not clear how it gets better.

The University of Virginia rape case profiled in Rolling Stone has fallen apart. In doing so, it joins a long and distinguished line of highly-publicized rape cases that have fallen apart. Studies often show that only 2 to 8 percent of rape allegations are false. Yet the rate for allegations that go ultra-viral in the media must be an order of magnitude higher than this. As the old saying goes, once is happenstance, twice is coincidence, three times is enemy action.

The enigma is complicated by the observation that it’s usually feminist activists who are most instrumental in taking these stories viral. It’s not some conspiracy of pro-rape journalists choosing the most dubious accusations in order to discredit public trust. It’s people specifically selecting these incidents as flagship cases for their campaign that rape victims need to be believed and trusted. So why are the most publicized cases so much more likely to be false than the almost-always-true average case?

I've been working my way through Geoffrey Miller's Spent: Sex, Evolution, and Consumer Behavior (a third of the way through, it's excellent thus far), and one of the things he emphasizes is that when we purchase goods as signals, the higher the cost of the signal the stronger the signal.

So how does this apply when it comes to signaling on moral dilemmas? The same, it turns out.

A rape that obviously happened? Shove it in people’s face and they’ll admit it’s an outrage, just as they’ll admit factory farming is an outrage. But they’re not going to talk about it much. There are a zillion outrages every day, you’re going to need something like that to draw people out of their shells.

On the other hand, the controversy over dubious rape allegations is exactly that – a controversy. People start screaming at each other about how they’re misogynist or misandrist or whatever, and Facebook feeds get filled up with hundreds of comments in all capital letters about how my ingroup is being persecuted by your ingroup. At each step, more and more people get triggered and upset. Some of those triggered people do emergency ego defense by reblogging articles about how the group that triggered them are terrible, triggering further people in a snowball effect that spreads the issue further with every iteration.

Why did the Michael Brown case explode on the internet and not one of the hundreds of other cases of police killing unarmed black people each year?

Alexander:

I propose that the Michael Brown case went viral – rather than the Eric Garner case or any of the hundreds of others – because of the PETA Principle. It was controversial. A bunch of people said it was an outrage. A bunch of other people said Brown totally started it, and the officer involved was a victim of a liberal media that was hungry to paint his desperate self-defense as racist, and so the people calling it an outrage were themselves an outrage. Everyone got a great opportunity to signal allegiance to their own political tribe and discuss how the opposing political tribe were vile racists / evil race-hustlers. There was a steady stream of potentially triggering articles to share on Facebook to provoke your friends and enemies to counter-share articles that would trigger you.

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If campaigners against police brutality and racism were extremely responsible, and stuck to perfectly settled cases like Eric Garner, everybody would agree with them but nobody would talk about it.

If instead they bring up a very controversial case like Michael Brown, everybody will talk about it, but they will catalyze their own opposition and make people start supporting the police more just to spite them. More foot-shooting.

Horrifying, in some ways, because this model of signaling implies that the issues that divide us most will continue to get the most traction in communities we spend time on.

In some rare cases, like certain subreddits, a certain groupthink or narrowness/homogeneity of audience may permit some controversial content to remain a harmonious gathering rather than a lightning rod of verbal warfare.

However, more likely that divisive issues are the ones that go viral most quickly on the social networks we spend time on. Even the ways they are designed can tilt the “incentive gradient” towards combat.

Alexander points to Tumblr as one example.

Tumblr’s interface doesn’t allow you to comment on other people’s posts, per se. Instead, it lets you reblog them with your own commentary added. So if you want to tell someone they’re an idiot, your only option is to reblog their entire post to all your friends with the message “you are an idiot” below it.

Whoever invented this system either didn’t understand memetics, or understood memetics much too well.

What happens is – someone makes a statement which is controversial by Tumblr standards, like “Protect Doctor Who fans from kitten pic sharers at all costs.” A kitten pic sharer sees the statement, sees red, and reblogs it to her followers with a series of invectives against Doctor Who fans. Since kitten pic sharers cluster together in the social network, soon every kitten pic sharer has seen the insult against kitten pic sharer – as they all feel the need to add their defensive commentary to it, soon all of them are seeing it from ten different directions. The angry invectives get back to the Doctor Who fans, and now they feel deeply offended, so they reblog it among themselves with even more condemnations of the kitten pic sharers, who now not only did whatever inspired the enmity in the first place, but have inspired extra hostility because their hateful invectives are right there on the post for everyone to see.

I don't see this as much on Tumblr because the ones I follow don't tend to traffic in this type of stuff, but the design observation still holds.

I see it more often on Facebook. Someone signals their absolute affiliation with one side of a controversial issue. Since there is no dislike button, to disagree with that person someone has to post a reply, and thus begins the time-honored comment thread joust to exhaustion in which neither side changes the other's opinions but instead entrenches even more deeply in their fortress of opinion.

It happens on Twitter, too, but the situation there is often more dire because of character limits and the difficulty of following conversation on that platform. The discussion gets splintered across multiple tweets such that it's impossible for all but Twitter experts to piece the sequence of verbal argument back into one coherent thread, let alone understand each side's arguments.

Moloch – the abstracted spirit of discoordination and flailing response to incentives – will publicize whatever he feels like publicizing. And if they want viewers and ad money, the media will go along with him.

Which means that it’s not a coincidence that the worst possible flagship case for fighting police brutality and racism is the flagship case that we in fact got. It’s not a coincidence that the worst possible flagship cases for believing rape victims are the ones that end up going viral. It’s not a coincidence that the only time we ever hear about factory farming is when somebody’s doing something that makes us almost sympathetic to it. It’s not coincidence, it’s not even happenstance, it’s enemy action. Under Moloch, activists are irresistably incentivized to dig their own graves. And the media is irresistably incentivized to help them.

Lost is the ability to agree on simple things like fighting factory farming or rape. Lost is the ability to even talk about the things we all want. Ending corporate welfare. Ungerrymandering political districts. Defrocking pedophile priests. Stopping prison rape. Punishing government corruption and waste. Feeding starving children. Simplifying the tax code.

But also lost is our ability to treat each other with solidarity and respect.

Alexander's piece is a long one, but it's a must read. We live in the golden age of trolling.

Respect, or the value of gravity in the NBA

Tom Haberstroh lists his top floor-spacers of the year in the NBA (ESPN Insider paywalled article). He came up with a composite of SportVU's proprietary gravity and distraction scores, two pieces of data which, as far as I can tell, are only provided by Stats Inc. to ESPN Insider and other professional paying customers (if any of you NBA Hoops fans know where I can find the data myself online, let me know!).

Haberstroh explains these two scores and his methodology for generating a composite:

To recap, gravity score measures how closely a player's defender sticks to him off the ball. Higher gravity scores generally belong to bigs because their primary defender must stay close and also protect the basket. On the other hand, guards typically have lower gravity scores simply because defenders have more liberty to shade off their guy on the perimeter. But elite shooters typically generate more attention off the ball.

Then there's distraction score, which quantifies how much a player's defender is willing to help off the ball to stop the ball handler. The worse he is as a shooter, the more likely his defender will be distracted by the ball handler. To identify the most effective floor-spacers in the NBA, I created a composite score that combines the two metrics. The result is what I've called "respect rating," which has now been translated to a 1-to-100 scale with 100 being the most magnetic (think sharpshooters) and 1 being least magnetic (think non-scoring bigs).

No surprise, Steph Curry tops the list with a respect rating of 97.9. He was #1 in Haberstroh's composite ranking last year as well. Klay Thompson is third with a rating of 94.4, and you can understand much of the Warriors success this year in those two rankings.

What's interesting to me as a Bulls fan is that Derrick Rose ranks 14th. Much analysis of his value to the Bulls is built off his raw individual stats, but the interaction effects of basketball mean he's undervalued in terms of his value to the team as someone who keeps defenders away from his teammates.

In the modern game, where zone defense is allowed and where the trend is for heavy help defense to swarm the ball, having players who have high gravity and distraction scores, who you can't help off of, is critical to maintaining the type of floor spacing that opens driving lines or provide open jump shots. There's a reason that the most trendy NBA offense now is "pace and space"; both pace and space are ways of trying to neutralize the trendiest style of defense, the Thibodeau-style defense that punishes isolation plays and post-ups.

I still wish Rose would decrease his number of three point shot attempts, at least until he finds consistent form in practice. His form on threes has been so erratic this season, and he squanders his value as one of the top floor-spacers in the NBA when he chucks one of those up. When he drives, he not only increases his chance of drawing a foul, but his gravity increases the odds one of his teammates will come open for a higher percentage shot.

I'm still super bullish (pun sort of intended) on the Bulls this season. Cleveland is a mess, the Bulls are deeper than they've been in years, and the East is much weaker than the West as a conference. Noah is still coming back into fitness and health after offseason knee surgery, Butler has blossomed into a true two-way star, Mirotic adds a legitimate floor spacer as a true stretch four, Brooks is an effective source of offense for the second string team, and declarations of Rose as Grant Hill Part 2 were premature. 

One of the kinks they still have to work out, however, is how for Rose to best maximize his gravitational pull. Three-pointers and layups/dunks are the two most efficient forms of offense, but only if you can get them. The mid-range jump shot may be inefficient and a dying art, but Rose is one of the rare players for whom that seems to be an exception.