psychology Archives - Page 10 of 10

What are prices for? II

Can prices make the world better? Perhaps one could argue that it already did! Yet for the first in history, putting a price on something free could very well allow us to step into a future that’s remarkably better than the status quo. And that’s the price on carbon.

For the longest time; perhaps for far too long, emitting carbon dioxide is free. To be fair, when we breath out, we emit carbon dioxide. But that is through the food, grown during our lifetimes. One may argue of course that cows belching and the dairy industry creates a lot more greenhouse gas emissions in the form of methane as well.

Brushing food industry aside, let’s ask ourselves how a carbon price makes the difference. By charging industries for burning fossil fuel and emitting carbon dioxide through whatever industrial processes, we are saying that the release of carbon dioxide into the atmosphere when it should rightly be stored in minerals and in the ground as oil, gas and coal is harmful to the world. We are saying that people ought to pay a price for releasing the carbon dioxide in the air and causing climate change.

The issue is that we all live in a single atmosphere but the carbon price is different everywhere and we allow people in their own countries to somehow set this price or a regime to manage this price. And then we call it a carbon tax. Or in other places, we put a trading system around it and the traded price becomes the carbon price. There are times when prices work better when they are different in different places. But perhaps not this time. The fact carbon is free or much less costly in one place but not another is just going to encourage more gaming of the system.

The world needs to set a price, and really align on it. There is nowhere in the world where it is cheaper to emit carbon in terms of the environmental and climate costs.

What are prices for?

The cynic knows the price of everything and the value of nothing
Oscar Wilde

I don’t think this is the first time I’m putting up this quote. But I’m just wondering today. What are prices for? Why are there prices for things? What does a price mean? If anything at all?

Prices are signals from the perspective of economics. The level that clears the market; where demand matches supply. A high price or low price doesn’t really mean much. It’s unclear if the prices reflects costs of production because there can be market power driving margins. Besides, when storage costs are expensive, a producer might be keen to sell excess supply at lower than production costs.

But prices drives behaviours; they create some kind of incentive to produce, to trade, to buy, and sell. It is some kind of benchmark against which we evaluate our preferences. Because we’d try to figure out if something was ‘worth the price’. And so the market moves; and people try to justify prices with attributes, features, emotional storytelling. And prices in turn drives those stories, emotional expression and comparisons.

Bad memory, good understanding

I had a bad memory and in school I was never quite able to cram for examinations. I found memorisation a complete chore and whenever I had to remember something, it was important that I found something already in my memory to associate it with so as to bond the materials better to my mind.

It turned out that this exercise from young did two things for me. One is that it caused me to develop an interest for learning and genuine understanding when confronted with something new. Since I wasn’t able to retain much in my mind, what I did, I kept them for much longer than everyone else. And I had to develop my own reasons and purpose for wanting to put something into my memory since they were usually stored longer term. And the other was that it gave me a method that allowed my memory capacity to accelerate as I learnt more.

The second point requires a bit more explanation. When I recall things by associating the new information with something already in my mind, I’m actually causing the web of my knowledge to be denser. When a piece of information stands alone, it is easily forgotten. But when you connect it with other information, it suddenly becomes more memorable.

Take for example you meet a guy and he tells you he is 23 years old, then says nothing further. Your memory of him is reinforced by how he sounded, his clothes, hairstyle and perhaps handshake. But if he also tells you that his Mum is a widow, and he had gone to college in Boston, you might actually take all these pieces of information, form even more associations and once you meet him, you’d be able to recall him better than if he had not shared the additional information.

If you’re good at quick wins, you might miss out the opportunity and the grounding to get the harder wins. So when the quick wins are exhausted, you find yourself poorly positioned to make any further wins.

Random Issues

In this holiday season, The Economist discusses Joel Waldfogel’s Scroogenomics with a little humour. Of course, the signalling effect of gifts is once again ignored.

Emily Yoffe writes about sibling’s “rivalry” on Slate.com. The article explores the love-hate cycles that siblings undergo through the lifetime and considers the influence of parents. In general, the article’s inclinations is that having siblings is generally better than not having any; children benefits from unintended ‘guidance’ from older siblings especially through even the mildest verbal bullying. It helps to have someone close to your age beside you most of the time when you’re young because it prepares you for social interaction and also helps you understand the mind of another. Perhaps most importantly, having a sibling makes an ego that blooms out of a single child less possible.

The small number of psychologists who study sibling relationships say that their intensity in childhood helps prepare us for the adult social world we will someday need to navigate. After, all every day siblings teach the necessary, if painful, early lesson that you are not the world’s most important person.

Pop-Science seem to be poking fun at Avatar; suggesting that the film is made possible by technologies and science that would be impossible in a world that is implicitly advocated in the film. It is interesting to note that several of the film’s actors have signed on for potential sequels and as my sister rightly points out: these actors, like Sam Worthington and Zoë Saldaña are not exactly going to appear in the future films since they’re all Na’vi anyways and merely helping to generate the computer graphics if not offering their dubbing services as well.

The Value of Pessimism

I felt a bit vindicated to read in the Lexington column in The Economist‘s Christmas edition that two writers have decided to tackle ‘the American tendency towards mindless optimism’. Being a habitual pessimist it does feel good occasionally to read about people who are pessimists and stand up for their views instead of let themselves be bashed by optimists.

The two writers mock the optimists for being too positive and too dependant on positive thinking to help them in their lives, from defeating cancer to not gaining weight. I like that the example of the banking crisis was used to justify when one should listen to ‘the killjoys’ and stop letting the bubble inflate. Optimism apparently blinds sometimes, and this is where pessimism comes in. I like how one of the writers allude pessimism to ‘foul weather’ like thunderstorms: it might be dampening and depressing, but to some it refreshes and energises them. It can wake people up from their daydreams and their eternal sunshine (even though many people love thunderstorms because they can sleep comfortably through the cool weather).

But of course, there needs to be some optimism. Ultimately, Lexington argues that pessimism should be taken like a pinch of salt, just a pinch / ounce and not too much. For instance, one of the writers (a conservative) argues that mass immigration will not benefit America, but ultimately ‘America was built on the mass immigration of optimists’. I guess there needs to be a balanced dose of both sides.

On a side-note, reading The Economist makes me feel more and more pessimistic about the world… is it because of the coverage, or are world affairs really that gloomy and glum?

Rant on Standards

This is a blog entry from a while back that reflects some teenage ambitions and angst at oneself for falling behind. The context is no longer clear even to the author but reflects the drive and intellectual passion of my youth. It is interesting however, to see a reference to God (with G in caps) even when I was not yet a Christian.

Lots of frustration tied up in my mind because of the sudden deviation of my standards from those of whom I have been pacing. This spells disaster because I am already not catching up with the rest of the world and a hell lot of people thinks I am doing well. Apparently the graph is beginning to taper, signaling that it seems God’s will to confine me within the narrow abilities that I now seem to possess. I seriously have not reached the limit yet, at least I believe that’s not my limit. I should convince myself that this is just a stalling time for another ‘great leap forward’ in the path. The worry is that this leap will not come in time to save me from the crisis I have plunged into starting from March. It is an absolute, steady decline in both performance and perseverance.

It is perhaps time for some sort of change, more commitment perhaps? Somehow there’s this limit to the proportion of effort I can force into academic activities. As long as my total effort put into my life is expanding, this academic nonsense will expand. So by taking up more commitments, I am just driving myself into some hyper-work mode that will eventually force me to work harder for everything. For now, it appears that I am not busy enough.