Tuesday, April 27, 2010

Links I thought were awesome: Trains that don't stop, online dating, the budget, medical innovation, financial reform, and work ethic

It has again been a long time since I posted links. I found these very interesting.
The bullet train that never stops at a station. This is one of the coolest concepts I've seen in a long, long time.

The economics of online dating.

Arnold Kling's Long-Term Budgetary solution. Basically, raise the age of eligibility on Social Security to reflect increased lifespan, and voucher Medicare w government provided catastrophic care insurance. Simple and sensible. I go back and forth between fixed dollar medical care vouchers and vouchers for competitive health insurance that cover large variety of different subsets of conditions. On the one hand, people feel the need to use up their vouchers (FSA, anyone?), which would increase spending, and they also have more downside risk for each individual (you're not covered no matter how sick you are beyond your voucher if its not catastrophic care). On the other hand, vouchers don't make you predict what care you'll need. Perhaps there's a decent hybrid of the two.

Medical Innovation has been the single largest factor in reducing cancer mortality - more than an order of magnitude more important than incidence. (As a measurement, the average person - that average includes all the people who won't get cancer - will live 3 months longer from birth as a result of the medical innovation solely between 1996 and 2006).

Arnold Kling on the Financial Reform Bill. He doesn't like it - no exit strategy for subsidized mortgage credit (one of the factors that got us into this mess). No change in the role of ratings agencies, no way to ensure that regulators are able to analyze independently and finally, a consumer financial protection agency to "protect consumers from banks" when the banks were actually the ones who needed to be protected from consumers.

An incredible insight into what determines successful outcomes - in this case, what made Tom Brady go from a backup freshman quarterback to one of the best quarterbacks of all time. It started and ended with a legendary work ethic. There's a much broader point to be made here about inequality of outcome vs inequality of opportunity.

I'd point out that the top tier quarterbacks in the NFL - Brady, Brees and Manning - share this and only this trait - their legendary work ethic. They are some of the least physically gifted quarterbacks in the NFL (If I recall correctly, Brady's 40 entering the draft - 5.2 -was slower than mine from sophomore year in high school, and I am definitely not a professional athlete. Manning's not exactly a blazer, either, and Brees may be the shortest starting quarterback in the NFL.). I'd point out that even Payton Manning - whose "bloodlines", exposure to football from a young age and family connections should have made it unnecessary to work so hard if they mattered that much - has a similar work ethic, which is why he and Brady are the two best, as opposed to the much more naturally talented quarterbacks littering the NFL as failures. Brees is the same way. Chris Simms, on the other hand, has the same bloodlines as Manning, and just as many physical gifts, but hasn't succeeded in nearly the same way.

Compare that to JaMarcus Russell or Michael Vick or Alex Smith or David Carr or any other of a legion of quarterbacks with every measurable under the sun - tall, strong arm, accurate, big/hard to tackle, often fast, etc - but with no work ethic. They litter the side of the proverbial NFL streets.

This isn't limited to football - Larry Bird used to actually show up at the Celtics' gym before the janitor arrived to turn the lights on, so he started shooting in the dark. Ray Allen takes 300 shots per day before the start of practice, and is infamous for needing to correct everything he does wrong in real time - like, at halftime he goes and takes shots from all of the places on the floor he missed shots from until he feels confident he can repeatedly make them. Jordan's work ethic was so legendary it spawned an MVP season from someone else (Barkley) because Barkley saw him at the Olympics and realized he'd never be able to win an MVP unless he started amping up his workouts to Jordan's level. Supposedly, LeBron had the same Barkley experience when at the Olympics watching Kobe.

Contrast this with Michael Beasley or Derrick Coleman or Gerald Green - superlatively talented players with differing levels of success

This leads to two points: a) Denver's decision to trade up for Tebow instead of Clausen makes more sense (McCoy, maybe a different story, but not Clausen), and b) more generally, for those not interested in football or basketball, it's not just about "luck" and "connections". The three best quarterbacks of this generation were the hardest working, and that anecdotally applies to most other fields - it certainly applies to investing, at the very least, and computer programming (read "Outliers"). I've heard a lot of people argue for equality of outcome as a mechanism of measuring fairness because outcome is "largely based on luck and socioeconomic starting point". I call bull. If outcomes are unequal, figure out why, first, and address the underlying cause, not the symptom of outcome inequality.

If you're still skeptical, why have the socioeconomic progression of various minority groups been so different? "Racism" is the common answer, but most Americans cannot tell the difference by sight or name between various different Asian ethnicities, but there is a wide disparity in outcomes there. Cultural factors and historical factors in survival are where it starts to get interesting. (Again, I'd suggest "Outliers").

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