Benefits of Procrastination

Stop Procrastinating
Might not always be the right way...

Our views towards climate change are often tinted with a veil of emotions – fearful of our children’s safety, the prospects of more disasters and such. As a result, we proceed as cautiously as possible when studying it and would rather we err on the side of exaggerating the effects of climate change than to downplay it. Robert P. Murphy, an economist specialized in climate change economics, gave the whole story a more objective treatment in his article, The Benefits of Procrastination: The Economics of Geo-engineering

The article mentions some interesting geo-engineering schemes that are currently explored, but the main issue of the article is not the technologies involved but the cost-benefit analysis for the choice between waiting for more options to fight climate change and fighting it now through emission reductions. He argues for wait-and-see approach towards climate change and encourage geo-engineers to get on with their innovations and research.

Murphy believes that procrastination might give us a better assessment of the effects and extent of climate change our economic activity is resulting in and thus allow us to respond with more effective initiatives without compromising our economic growth at present and paying too high a cost from preventive measures such as reducing emissions.

Interestingly, discount rates isn’t even the issue. The significant idea Murphy is after is that we could buy time to refine our assessment of climate change and also the means to tackle them. And that it’s worth it. I’m not sure if the potential life loss from the risk is accounted for but his suggestions would sound insane to those who are suffering at the frontline of climate change, like the Inuits in Arctic region.

Even as an economist-to-be, I know that these issues is not always about economics and when we are thinking about global issues and aggregating cost, we almost definitely will leave out the non-monetary cost borne by the fringe groups. Perhaps Murphy could re-do his calculations and analysis after he reviews the cost of the effects of climate change even using more conservative estimates of the effects.

Science Bits

White Gramophone
Blasting out in 60, 59, 58...

It’s Christmas today and I have no Christmas gifts for my readers besides a new discovery. Scientific American offers a great podcast series called ’60-Seconds Science’. It offers bits of scientific discoveries from recent research within 60 seconds; the information is smaller than bite size and definitely don’t require much chewing, which makes it perfect for anyone tuning in to look for an anecdote for a speech or introduction for an article.

‘If Time flew, you had fun’ is a pretty interesting one and the same can be said for Caffeine Merely Masks Alcohol’s Effect. The narrator delivers their science bits in the most entertaining way for something so academic. For people who fancy social sciences and the less technical areas of science, the podcast is a wonderful window to the science mankind is engaging in today.

For other intelligent content delivered in 60 seconds, check out 60-second Psych and 60-second Earth. Who knows, you might just pick up some bits of interesting facts to start a conversation with a stranger.

Tech Highlights

Its colored!
It's colored!

Tech Quarterly is here again and here are some highlights.

There’s an interesting study about the contagious effects of loneliness. It sounds kind of paradoxical since the fact that it can be spread at all shows that the victims are already interacting with people and thus not ‘lonely’ technically speaking. In the area of medical research, there’s a glue designed for aiding bones to heal.

As for gadgets and machines, readers might be interested in an article on E-readers and potential future developments that these devices will move towards – especially having coloured displays. The discussion on ways of typing different language text on mobile phones helps you understand more about non-latin languages.

Finally, there’s something on mechanization of agriculture; the article reveals surprising labour shortage in this field of work. I thought the solution might be to move the unemployed people from the urban areas to these agricultural regions but well, they designed all sorts of machine to do the job so that means the unemployed will have to find something more complex to earn a living.

Decaying Plastics, Melting Ice

Dripping Off
Dripping Off

We are dependent on oil not only for energy but something almost as ubiquitous in modern day products. Shaking off other aspects of our dependence on oil is thus as important as diversifying sources of energy. And some Koreans just found out how to make an alternative kind of plastic way faster.

Meanwhile, Brian Palmer wrote a piece on Slate.com about how we might be able to overcome bacteria resistance to anti-biotics, a problem we have faced since the invention of anti-biotics. Fighting evolution is not the ultimate solution, as Palmer argued; he believes we need to adapt the rules of evolution and manipulate the bacteria with other strategies to overcome the problem.

Johann Hari writes on moreIntelligentLife about how Arctic is changing as experienced by the Inuits living there. Many of us may know about climate change and perhaps some of the sciences behind it but our lives goes on pretty much the same except for periodic violent weather we might intuitively attribute to climate change. To climate scientist, arctic is at the front line of this phenomenon and Hari writes convincingly about the reality of climate change in the arctic and how the lives of the Inuits are affected. The writing reflects a deep respect for those who lives in the arctic; something lacking in most other appeals for attention to global climate change. Ultimately though, it reflects how people are all looking at the problem with different lenses and focusing on different consequences. If anything is to be done at all, we’ll have to connect the different groups together.

On other green matters, Nina Shen Rastogi asks on Slate.com, Should You Flush Your Drugs Down the Toilet?

Insuring Nothing

Nope, not insured against kids
Nope, not insured against kids

Tyler Cowen mentioned something about product insurance at one part of his book, Discover Your Inner Economist. He says that one should not argue with his wife when she insist on buying product insurance even when you know that the results are economic analysis are at your favour. Presumably, there are some other cost-benefit analysis taking place, at the level where the cost of winning the argument greatly overwhelms the benefit (which of course is the cash saved on the product insurance). The Economist asked why people continue to buy them even when products are unlikely to fail, which means that these product insurances are immensely profitable for the electronics retail sector. The researchers who examined purchase data from a big electronics retailer for over 600 households from November 2003 to October 2004 concluded that the purchases were linked to the shopper’s mood. Of course, a less-than-rational wife might be the explanation, but even the wife has a sound explanation for that:

[…] the emotional tranquillity that comes with buying a new warranty is not in itself without value, even if “rationally, it doesn’t make sense”.

But I find an ingredient missing in this story; the researchers probably falsely assume that all the shoppers have got the same level of perceptiveness. And I believe perception have all to do with the purchase of product insurance. Think about it, when was the last time you had a product which failed and the warranty period was just over and you blame yourself for not buying additional coverage? But how about the last time when you did buy the product insurance and it didn’t fail at all within the span of its usage, not once? Just like the belief that we’re unlucky enough to always join the slowest queue in the supermarket; our erroneous perception of the frequency we get unlucky can make us more frustrated with a product insurance unextended than a product which didn’t fail after we bought the coverage despite the fact that they probably inflicts the same cost on you. Obviously it actually hurts you more when you think back and regret not extending coverage; you probably won’t even think back on how stupid you were to buy product insurance for a reliable product since you’re using it happily.

This creates a bias for purchasing product insurance. Our faulty perception supplements our faulty memory in suggesting that buying product insurance would be the wise choice, going by the seemingly sound argument of ‘if the product fails, I’m protected; and even if it doesn’t, I get a peace of mind plus the retailers deserve the reward if they recommended me the durable kind of good’. You could very well have realised that if the product was that durable the manufacturer would already have taken a cut for that on the retail price and that if the product ran a high chance of failure the retailer wouldn’t even offer you the product insurance in the first place. And if your wife has anything to say about that, it’ll probably be “Must you be that calculative?”

Fake Stuff

NPhone rocks!
NPhone rocks!

The Economist ran a story about counterfeit handsets in China lately. Counterfeiting and piracy is not exactly all imitation and no creativity but it does actually hurt the economy, or so claimed by original manufacturers because it affects their incentives to innovate. The difficulty lies with assessing whether the consumer would even consume the good in the first place if the imitation is not available. As a matter of fact, I think the best way for these problem to solve themselves is for consumers to realise which one of the products (real or fake) offers them the utility they need. In most cases, people may just be satisfied with imitations then so be it; the original manufacturers simply may not have profited from these group of consumers who would otherwise not be able to afford the real thing.

It is only when the utility functions of these products coincide and people switch from using original to fakes that matters (but the difference should be made up by the disparity in quality or the time lag in introduction of imitations) and becomes a huge problem. And it would be a bad thing if manufacturers ends up engaged in the competition of who is best able to prevent piracy – that’s senseless innovation that penalizes the society in general. Take Digital Rights Management (DRMs) for example. It sucks, everyone hates them and games like Red Alert 3 lost business because of it (though most part of its lack of popularity was attributed to its poor interface design and lame scenarios) and consumers hate big firms for them.

Perhaps intellectual property should be contained in ways that are stricter such that innovations built upon ideas that belongs to others are welcomed. In many sense, parodies are imitations, and so are fan fiction, built upon characterization or story frameworks that belongs to others. We should perhaps start treating the NPhone’s relation with iPhone like Shrek’s relation with Matrix. A joke.

Careful Bots

Steady...
Steady...

It’s a long time since I last directed readers to a lengthy prose penned at The New Yorker; while some of those long-winded stuff are reserved for pure entertainment when one is really bored in front of the computer, Jeremy Groopman wrote an interesting narrative report about robots that cares for patients. If you’ve some time to spare, it’d be good to go through some of these technology stuff that is more elaborate and human in reporting than those featured in The Economist.

The same magazine reports about another kind of careful technology. Seymour M. Hersh explores a more remote topic that less people would really bother about seriously despite its implications on many.

Tech Muscles

Standing Strong...
Standing Strong...

No doubt the Japanese are really good with technology and particularly great with their niche areas of precision engineering. The Economist reveals how indispensable some medium-sized corporations in Japan have come to be so (despite their somewhat unknown-ness) in our global tech economy. Their culture of monozukuri (making things) and kaizen (continuous improvement) have probably helped Japan sustained these niches but I must say that the article revealed an important aspect of business in certain industry that have too often been overlooked.

The very fact that long-term working relations helps these Japanese firms gain trust from their client for reliability and a special understanding of their client’s needs presents a difficulty for other firms to compete with them. It is something rather different from brand-loyalty that consumers might exhibit like the case of food, as a recent Schumpeter article was suggesting. This loyalty is something functional and as long as these engineering firms continue to provide excellence in the fields they engage in, they’ll continue to thrive.

Of course, The Economist sounded some warning about the secrecy these Japanese firms place on their technology and how their belief in the strength of the firm being stored in the collective mind of their employees devour them of labour flexibility that may some day come to haunt them. Japanese firms have prevailed more or less and I believe they’ll adapt their culture to the changing time, all while insisting they didn’t quite change the traditions and beliefs.

What I Know Is

Changes Everything? Not sure about that.
Changes Everything? Not sure about that.

What I Know Is this book took me almost a year to finish but in actual days, I only spent a week or so reading it. Wikinomics by Don Tapscot and Anthony Williams was published in 2006 more or less as a study of this new emerging business model that surrounds most of Google’s free products, social tools like Facebook and Twitter as well as other more business-oriented networks where mass collaboration is used to produce products, free or commercial.

The book definitely isn’t an easy read and after reading the first half of the book I got pretty sick of the fact that the authors were merely packaging the case studies into different categories of models and repeating their theory of how mass collaboration is going to change the way goods are produced all around the world. That explains the gap of so many months before I picked the book up a week ago and continued from where I left it. The case studies were mostly fascinating, like the story of Goldcorp Mining and InnoCentive but others seem to be overly used, like for the case of Second Life and that makes the author seem like they’re overhyping the phenomenon.

As the Wikipedia entry for the book quoted from Harvard Business Review, “like its title, the book’s prose can fall into breathless hype.” Indeed, the hype over mass collaboration seems a little overwhelming and when one is more of the skeptic the book becomes quite a disaster, especially when the book was first published in 2006 and 3 years on, you don’t quite see how the subtitle ‘How Mass Collaboration Changes Everything’ manifest itself in the real world at all. Yes I know mass collaboration did help people and changed things but then it wasn’t that breathtaking and mostly, life just went on as usual. Perhaps more important was the fact that this Subprime Financial Crisis seemed to be the working of a ‘mass collaboration’ of stupid people. In other words, Tapscott and Williams thought nothing of the risk of Groupthink in mass collaboration.

The prose is rather academic, starting with their ‘hypothesis’, which is the subtitle of the book somewhat and then the authors goes on to show how mass collaboration is being played out in different sectors, industries, different markets and such. To be fair, Wikinomics is a business sort of book, it focuses on the methods to harness the benefits of mass collaboration, possibly the mechanics of motivation that drives this phenomenon and discuss the success of these various means. It’s the business sort of academic compared to what I generally prefer, the intellectual sort of academic. I believe students of A Levels would be way more intrigued by Wisdom of the Crowds by James Surowiecki, which I gladly finished almost a year ago.

The book discusses Coase’s Law, which is basically an explanation of why firms expand to organize transactions within the firms. The Nobel Laureate for Economics in 2009, Oliver Willamson got his prize through his study and refinement of this theorem by Ronald Coase.

Wikinomics is definitely a book for business students and businessmen interested in working on projects that involves profiting from mass collaborations and setting up of networks. It is likely that some projects are more adapted to mass collaboration than others and some products will forever be provided by traditional manufacturing or services.