I made a pretty big discovery at the supermarket today: E.L. Fudge Original (henceforth ELF-1) and E.L. Fudge Double Stuffed (ELF-2) sell for the same price at the supermarket.  My first thought was that the fudge stuffing must be both free to produce and completely weightless.  I quickly discovered that the ELF-1 package actually weighed more than the ELF-2 package, suggesting that the fudge was not weightless but rather some sort of anti-gravity substance that caused the package to weigh less.

It wasn’t until I got home, and opened and carefully examined my newly-purchased ELF-1 and ELF-2 packages, that I understood that there were actually more ELF-1 cookies in their package than ELF-2s in theirs.  Assuming there is indeed twice as much fudge stuffing in an ELF-2* and that the shortbread portions of the cookie weigh the same in ELF-1 and ELF-2, some very basic linear algebra will show that rather than having negative weight, a unit of fudge stuffing weighs 1.42 grams.

As far as the the price of producing the fudge stuffing: given the equality of the prices of the packages, my calculation is that the elves can produce 2 units of fudge per single piece of shortbread (there are two shortbread pieces per cookie).  Of course, that is only if the price is supply-driven.  More likely, it is demand-driven: if the prices ELF-1 and ELF-2 diverged, demand for whichever was cheaper would increase so heavily that it would preclude the feasibility of producing both versions.

The other fascinating bit of data in the above table: the number of calories in an ELF-1 is the same as in an ELF-2.  I don’t know enough about food to make any sense of this, but it might be evidence that the shortbread portions of ELF-1 and ELF-2 are actually different. Otherwise the fudge would have to be calorie-less while still contributing fat.

Previous posts: choosing which side of the street to buy your chicken wings from based on how many you want, E.L. Fudgehenge

*Allison has done some (methodologically questionable) research on the related question of “Is there twice as much stuffing in Double Stuf Oreo than in a regular Oreo?” and concluded there was not.

Sports I don’t like

In response to my most recent post on Things I Don’t Like, Southtwelfth replied: “Biking and baseball?? You’re even more of a communist than I am, Alex!”

I have to reply to this reply.

Although I say it’s because it’s boring, the real reasons I don’t like baseball are because Little League was a constantly traumatic experience for me that most likely left me socially withdrawn, and because the Pittsburgh Pirates have been historically bad, and arguably the worst professional sports team, since I was 7, right around the time I started playing Little League.  I didn’t think it had anything to do with my political or economic views.  But maybe I’m wrong.

Now, nobody cares whether or not I like baseball.  What people seem to care about (at least people blogging for a certain American institute dealing primarily with enterprise) is the important debate Sport X: Socialist or Capitalist?

If I didn’t know better than to question the infallibility of The Institute’s word on soccer, I might actually put soccer into the capitalist column, but I do know better, so moving on:

Baseball - Capitalist

I think we can all agree on this one.  On the business side: No salary cap, and trading seems to balance cost and value alright.  The US exploits capital from the developing world.  In the game itself: Requires minimal teamwork (nonmarket coordination), ties are impossible.  There’s also a relatively small umpire to player ratio.

Cons: Sure there is redistributional revenue sharing and rookie drafts, and the crackdown on performance enhancing drugs (is that still going on?) is just red tape fussing with the invisible hand.  And, many new stadiums are partially publicly financed.  Also, baseball is widely popular in Venezuela and Cuba.  But I mean.  It’s baseball.  It has to be capitalist, right?

Bicycling - Capitalist

Turns out Southtwelfth is right about this one, although I had to think about it a while.  I associate biking with socialist enclaves like the Netherlands, France, and the West Coast, which led me to think it must be socialist.  But it turns out that the Union Cycliste International is not a players union, but a governing body.  But what really tips the “sport” of biking to the capitalist side is the laissez-faire attitude all bikers seem to have regarding traffic laws.  Content to ignore red lights and stop signs and ride on the fucking sidewalk, but flip their shit when a car doesn’t want to give them an entire lane, that’s pretty much Fortune 500 behavior.

[So that (1) we don’t just get into a pattern of sports I don’t like are capitalist and (2) I don’t only piss of bikers, here is a post about socialist soccer that had been marinating in my drafts folder since the World Cup began:

Nice things I can say about soccer:

• It is less boring than baseball
• The world cup only happens every four years
• My favorite soccer team doesn’t employ any rapists.

]

Christmas, Pigeons, and My Run This Morning

At some point in my econ education, I learned about Christmas accounts, which I don’t think still exist.  A Christmas account is a zero-interest savings account with a prohibitively large penalty if you withdraw before December 1 or so.  If you use a Christmas account, you are basically paying a bank to hold onto your money and not let you have it back, because you know you’d just end up spending it on something stupid like food and rent instead of Christmas presents.

This is really just some normal impulse control, but it implies a pretty nifty meta-rationality that seems batshit from an econ 101 perspective where people behave rationally, or even a worldview where econ is pointless because everyone is irrational.  People understand their decision making to be faulty and constrain their options so that they are ultimately making good long-run choices.  It’s cool stuff that makes people seem pretty darn smart.

Except, turns out, pigeons do it to.  A 1974 article by GW Ainslie called “Impulse Control In Pigeons” uses some clever experiment design to offer pigeons the equivalent of a Christmas account, and some take advantage.  Here’s the abstract:

Pigeons were given a small, immediate food reinforcement for pecking a key, and a larger, delayed reinforcement for not pecking this key. Most subjects pecked the key on more than 95% of trials. However, when pecking a differently colored key at an earlier time prevented this option from becoming available, three of 10 subjects consistently pecked it, thereby forcing themselves to wait for the larger reward. They did not peck the earlier key when it did not prevent this option. This is an experimental example of psychological impulse and a learnable device to control it. Although only a minority of the subjects learned it, the fact that such learning is possible at all argues for a theory of delayed reward that can predict change of preference as a function of elapsing time.

How fucking awesome is that?

Anyways, I was thinking about these pigeons this morning, when I went for my first run in over two years.  I knew that there would be a point in the run where I would no longer want to run as far as I wanted to when I left the house.  So I decided the best thing to do was run straight in one direction and wait until I wanted to stop, and then call that half-way and turn around.  As long as what I wanted to run when I left the house wasn’t more than double how much I wanted to run at any given point during the run, I’d be set.  This didn’t work so well.  Not only did I turn around earlier than I had wanted, but I walked nearly the whole way home.

My new shoes seem to fit, though.

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It should surprise nobody that, after winning the fantasy march madness league that I made my coworkers do, I regressed cumulative player scores on fantasy draft position and plotted the residuals.  Durrell Summers ended up being the best value (ie, his actual scoring total exceeded his estimated scoring total by the largest amount).  Mack and Samhan were on my team.

Perhaps you can tell, but there’s a little heteroskedacity going on here (you can see a little bit of a funnel forming, with the lower draft positions being more dispersed), but as you’ll recall from your econometrics training, that won’t bias the estimates.  It just screws up the standard errors, so there’s no worries here.

I live across the street from a Chinese takeout spot.  In addition to all the sesame chicken and beef lo mein and the, well, Chinese food, the menu also contains cheesesteaks, coleslaw, tuna salad sandwiches, and fried chicken.

Actually, the fried chicken (they only sell large wings that sit in a warming tray but still look pretty awesome) has its own menu (or at least, piece of cardboard on the wall) to enumerate all the prices.  Committed to delivering you exactly the right amount of food, wings can be purchased in any quantity between one and ten, as well as in groups of fifteen, twenty, and thirty.  The pricing is somewhat curious however.

Well waiting for lo mein and dumplings a few months ago, I noticed this table of chicken prices.  The marginal prices—the price of one more piece of chicken—kind of bounce around.  This makes no economic sense.  If five wings costs 80 cents more than four wings, than surely the sixth wing should be at the very most 80 cents.  But instead, China Express has decided the sixth wing should sell for 85 cents.  What the hell!

Because of this weird scheme, I thought it might be the case there might be a clever way to beat the system.  It’s like when you are at the supermarket, and because of a sale, buying two of smaller containers of detergent is actually cheaper than getting the same volume in the bigger container.  Sadly, because the average cost is lamely, rationally, decreasing, no such steal exists with the fried chicken.

[Also, charts in google spreadsheets suck.]

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Hot Investment Tip: Candy Bar Edition.

Hopefully you didn’t lose too much money on my Super Bowl advice, but even if you did, your financial woes are about to be over!

It has come to my attention that there is a crucial gap in the Chocolate Bar market, illustrated by the above venn diagram.  My Hot Investment Tip for you, is to exploit that market inefficiency and fill said gap with peanuts, chocolate, and delicious nougat.

Now, I’m not saying that you’ll be richer than Snickers, which occupies the ideal spot in the chocolate bar nexus.  Instead, as clearly indicated by the diagram, you can expect your Nougat-and-Peanuts-All-Covered-in-Chocolate Bar to dwarf sales of Mr. Goodbar and even the 3 Musketeers, expecting a similar return to the Milky Way (which, I’m sure you’ll concede, is the best chocolate bar there is—for now).

It would perhaps be prudent to include a caveat about the Caramel-Peanuts intersection.  I was not aware there was a Chocolate Covered PayDay until doing some research, and I believe it was a special edition thing that probably doesn’t exist anymore.  There was also the Reggie Bar.  The less than hyper-successful history of the Chocolate Covered PayDay and Reggie Bar should not deter you from this Hot Investment Tip, however.  Because, and you’ll see this in the venn diagram, the new candy bar I am advocating contains nougat.

Hot Investment Tip: Super Bowl Betting Edition

Yesterday, I asked my brother whether he planned on watching the Super Bowl.  He hadn’t made up his mind, but suggested that having silly things to bet on would make the game more interesting. That got me thinking about silly bets that could make the game more interesting.

Since I promised a hot investment tip, I won’t bury the lead any further: if you watch the Big Game this sunday, you should bet some chump that the total score of the game will be an odd number.

When I first started to consider this, my inclination was that the score should be even around half the time or maybe a tiny bit higher.  Since almost all scores in football are either 3 or 7 points, games should go back in forth between odd and even totals with every score change.  Since I couldn’t think of a good reason that there should be more games in which teams score an odd number of times than games in which teams score an even number of times, it should come out to pretty much 50% chance of an odd score.  (the tiny bit higher comes from the fact that some scoring plays are worth an even number of points.  If there were only even scoring plays, the total score would always be even, and this fact (possibly) tips the chances of a even-pointed game above 50%).

That is what you should explain to your mark, to get them to practically give away their money.  I would recommend keeping the stakes kind of low so as not to tip them off to your ruse (also: avoid twirling your mustache villainously*).

But you’ll know better.  There are 256 regular seasons NFL games each year.  Thus, 1536 games have been played over the last six years.  In those 1536 games, the total score has been odd in 857.  That’s an astounding 56% of the time.  Furthermore, in all six seasons, there have been more odd-pointed games than even-pointed games.  Suggesting this is no fluke.

That means, your expected gain for each dollar you wager is 12 cents.  That’s huge, dwarfing any expected return you’ll get from a wager through a sports book, bonds, or mutual funds.  Really, this is a can’t miss opportunity.

Although I believe the statistics, I’m not entirely certain on the mechanism.  It might have to do with when to do for two, or the fact that teams try to break ties with field goals, but I don’t have any excellent insight there.  But I don’t understand how audio can be encoded as a digital signal, and my ipod works just fine, so you probably want to take my advice.

*Unless, of course, you have been working a longer con, in which your mustache twirling has been consciously established as a tell, when in fact it is a reverse-tell.  In such situations you should offer the opposite bet that the game will end with an even number of points scored, and twirl your mustache villainously while you do.  The mark, believing this to be your tell, will insist on changing the bet around.  You will pretend to reluctantly agree, and your reverse-tell mustache twirl long con will be a success.

How stupid are people (who watch movies)?

This econ paper that Freakonomics linked to is pretty darn cool.  It’s called “To Review or Not to Review? Limited Strategic Thinking at the Movie Box Office” (authors: Alexander Brown, Colin Camerer, and Dan Lovallo).  It suggests some interesting results:

1. Movie critics actually matter. The paper compares wide-released movies that were screened for critics before opening with “cold-opened” movies, aka movies that studios know are so crappy that it’s better not to have them reviewed at all.  Controlling for all the things you could thing of (metacritic score, budget, genre, rating, and a gaggle of others), they find that not letting the critics see a movie actually helps the box office gross.  This means that bad reviews matter.  Which I find quite comforting.
2. People are stupid. If all moviegoers were rational, in a repeated game like this, opening cold should never be the right decision.  It should signal: “This is a movie that is going to the get the worst reviews possible.”  This suggests that isn’t what happens**.  Rather, having not read anything bad about the movie, the movie going public knows it must not be great, but maybe it’s pretty good.
3. Some people aren’t as stupid; they work of movie studios. We read stories all the time about how studios mishandle the promotion of certain movies, and those criticisms always seem pretty valid to me, but this paper suggests that studios have a decent grasp on movie goers (and critics), or have some sense when to cold open a film.  The paper also mentions that the practice of cold-opening has increased in the recent years (although I’m curious if more bad movies are being made each year).  Also, the model they are using only requires some people to be stupid, not every single person that watches movies.
4. Critics aren’t that important. One of the most interesting results is relegated to a footnote.  The “cold open premium” persists after the opening weekend.  This doesn’t make sense at first because now reviews exist (and they are shitty).  The theory the authors put forward is that moviegoers use information on first-weekend gross to decide whether to see the movie the second week, and that this must overshadow the information on critical reception that they also have.  This would be perfectly rational if the first weekend watchers were rational, which we’ve established is not true.

The paper is very cool, even if I didn’t need this much data to know that people who went to Legion are idiots.  And perhaps the real takeaway is that the stupid moviegoing masses are slightly smarter than I give them credit for.  We’re dealing with a fair bit of informed decision making here (they pay attention to reviews and follow box office grosses when deciding what to see), but not quite enough; as the title says: “limited strategic thinking.”

*Here’s why this happens: Suppose movies are all scored on how much critics like them from 0-100 (and let’s say the scores are evenly distributed).  Suppose Wilma is releasing a new movie, “The Dancing Zombie”, and Waldo is thinking about seeing this movie.  If there are no reviews, Waldo should assume (based on the distribution of movie scores) that “The Dancing Zombie” is a solid 50.  But then Waldo thinks: “Wilma knows I’m going to think it’s a fifty, so if she thinks it’s higher that 50, she would have let critics review it.”  So then, Waldo must assume the movie is somewhere between 0 and 50.  25 is a good guess.  But then Waldo thinks: Wilma knows that I’m going to think that she knows that I’m going to think it’s a fifty, and hence she it must really be less than 25.”  If both parties are rational, and both parties think the other is rational, a limit approaches 0, so any review is better than none.

**But in reality, the prospect of seeing a zombie dance clouds Waldo’s rational perspective, and he goes and sees it anyways.  He probably sees the sequel too.

Experts weigh in on best music of the year

Leading economics professors with blogs also listen to music.

Two weeks ago, Harvard’s Greg Mankiw extolled the virtues of Lady Gaga.  Just today, Tyler Cowen of George Mason and Marginal Revolution proclaimed his affinity for Wavves.  I’m sure there’s some sort of Lady Gaga/Economics pun to be made, but it’s not coming to me.

Bonus: Noneconomist but respected Tax Policy scholar Dan Shaviro (NYU’s Law School) is not feeling Grizzly Bear but is psyched for the Pavement reunion.

Edit: Shaviro must have seen the MR post or something and got inspired.  He’s digging Girls, although he calls em “Girl”.

Statistical evidence that the Steelers run too much! →

Steven Levitt (co-author of Freakonomics) and Kenneth Kovash apply a game theoretic perspective to playcalling in professional baseball and football, and argue that teams are not optimizing their chances of winning the game.  This is because professional football teams run too much.

In conclusion, if you have a football team with a great quarterback and very good receivers and just mediocre running backs and horrible run blocking, and are entirely incapable of converting a first down on short-yardage runs, MAYBE YOU SHOULD THROW THE FUCKING FOOTBALL.