Tuesday, June 16, 2015

To Be More Creative, Schedule Your Work at 80% Capacity : The Art of Non-Conformity

This is an idea that has been used in other companies as well. Google has a "20% time" policy in place which essentially allows employees to do whatever they want with 20% of their time at work. Many of Google's best apps have resulted from this non-directed creative work time.

The wonderful book Scarcity also describes the economic and psychological impacts of not scheduling "slack" into your schedule. When you are pressed for time and experience scarcity throughout day, you actually think and perform worse. This has been shown in several studies and I highly recommend the book, which goes into detail on the research. It could be an awesome summer read.

To Be More Creative, Schedule Your Work at 80% Capacity : The Art of Non-Conformity
When Josh and Colby started Jolby & Friends, they were leaving a larger advertising agency. At that agency they would collaborate on work together, but always after hours. As they took the plunge to start their own business they knew that they wanted to have the ability (and their employees to have the ability) to be able to work on things in the studio they were passionate about. 
Therefore, Jolby & Friends runs on 80% capacity. What this allows us to do is go after clients that may not have the largest budgets, create work for art shows, and build out other internal passion projects (like this one, for example). 
What this doesn’t allow for is people taking extra long coffee breaks, playing foosball, working on freelance work or anything of that sort. The idea isn’t for people to have to only work 32 hours but rather enable our staff to be able to create work that in a larger agency they wouldn’t have the opportunity to do. This practice often influences our client work and allows us to always be learning and pushing our current skill sets. 
Lastly, it allows us to be the heroes. When a client calls and says “Is there anyway you can do this for me in a week?” the answer is often replied with a smile and “no problem.”
This isn’t always the case, though. For every upside there’s obviously a downside. One issue we often encounter is contractors and vendors not being able to budget their time as efficiently as we do. We actively work on this by explaining our process in detail as well as showing the upsides to some of our processes. 
The whole idea is based around a simple idea to create a creative environment in which our staff is comfortable, focussed, and—most importantly—excited about what they’re doing.

Sunday, June 14, 2015

Get Off The Computer And Complete This Italian Teacher's Summer Assignment. You Won't Regret It.

Get Off The Computer And Complete This Italian Teacher's Summer Assignment. You Won't Regret It.

1. Sometimes, in the morning, go take a walk along the seashore completely alone: look at the way sunlight is reflected on the water and think about the things you love the most in your life; be happy.

2. Try to use some of the new words we learned together this year: the more things you manage to say, the more things you’ll manage to think; and the more things you think, the freer you’ll be.

3. Read as much as you possibly can. But not because you have to. Read because summers inspire adventures and dreams, and when you read you’ll feel like swallows in flight. Read because it’s the best form of rebellion you have (for advice on what to read, come see me).

4. Avoid things, situations and people who make you feel negative or empty: seek out stimulating situations and the companionship of friends who enrich you, who understand you and appreciate you for who you are.

5. If you feel sad or afraid, don’t worry: summer, like every marvelous thing in life, can throw the soul into confusion. Try keeping a diary as a way to talk about how you feel (in September, if you’d like, we’ll read it together).

6. Dance, shamelessly. On a dance floor near your house, or alone in your room. Summer is dance, and it’s foolish not to take part.

7. At least once, watch the sunrise. Stay silent and breathe. Close your eyes, be thankful.

8. Play a lot of sports.

9. If you meet someone you find enchanting, tell him or her as sincerely and gracefully as you can. It doesn’t matter if she or he doesn’t understand. If they don’t, she or he wasn’t meant to be; otherwise, summer 2015 will be a golden time together (if this doesn’t work out, go back to point number 8).

10. Review your notes from our class: Compare the things we read and learned to the things that happen to you.

11. Be as happy as sunlight, as untamable as the sea.

12. Don’t swear. Always be well-mannered and kind.

13. Watch films with heartbreaking dialogue (in English if you can), in order to improve your language skills and your ability to dream. Don’t let the movie end with the final credits: live it again while you’re living and experiencing your summer.

14. In sparkling sunlight or hot summer nights, dream about how your life could and should be. During the summer, always do everything you can to avoid giving up, and everything you can to pursue your dream.

15. Be good.

Friday, June 12, 2015

Prize-winning DP students at Young Researchers competition | IB Community Blog

Some IB students in Norway recently won a handful of research competitions using the extended essays they finished for the Diploma Program. They didn't actually do any extra work; they simply submitted what they had already completed. Pretty cool way to rack up some extra honors as you apply to university.

Prize-winning DP students at Young Researchers competition | IB Community Blog
How do you use your research skills in life outside the classroom? 
I believe that research skills can be split into two categories: critical and analytical. Critical thinking skills allow me to intelligently question the validity of statements, sources and evidence, both inside and outside of research. Analytical thinking skills allow me to measure the importance of evidence, and extrapolate it to a conclusion. I would argue both skills are important in any context.

Red Nose Day - Jack Black and Felix

I don't actually know what Red Nose Day is, nor did I look at the website, but the video itself is quite powerful. There are terrible living conditions in much of the world with horrible experiences happening every day.

The boy's wish is to learn.

At a school like ours, we have every opportunity to learn, but I often see students not taking advantage of it. I see it as a moral obligation to learn the most we can in order to make the world a better place and help others like the boy in this video. We are quite fortunate and should take advantage of the privileges we have each day.

The Mutability of Wages - Paul Krugman

A great evaluation of supply-side policies that insist on lowering wages to increase production from Krugman.

The Mutability of Wages - NYTimes.com
Arindrajit Dube enlarges on my post about efficiency wages, pointing out that the same logic applies to firms that have monopsony power. That’s a very good point — and I think we’re circling in on an important part of the logic behind the “new view” on inequality policy, which says that policies to enhance worker bargaining power can have major effects on the distribution of market income. 
What’s going on here? Maybe two schematic pictures can help. 
The conventional view about the choices facing an employer looks something like this: 
The employer’s choice of wage to pay is pinned firmly in place by the invisible hand. It can’t pay less than the going market wage, or it won’t be able to attract any workers; it really, really doesn’t want to pay more than the going wage, because any wage increase translates dollar for dollar into lost profits. Minimum wages or a strong union can force the wage up all the same, but it takes a lot of political or institutional power. 
What Dube, I, and many others are suggesting is, however, that for quite a few employers — including large service-sector companies — the situation looks much more like this: 
There isn’t a sharply defined “going wage”, either because the firm has monopsony power — it can, in effect, choose the going wage in its local labor market — or because efficiency wage considerations lead it to pay more than the minimum, so that there are normally more applicants than places. And as I’ve drawn it, the top of the hill relating the wage rate to profits is fairly flat. In particular, the firm shouldn’t mind very much paying a somewhat higher wage, because this will produce offsetting benefits — a larger supply of labor if it has monoposony power, lower turnover or higher productivity if efficiency wages are an issue, maybe all of the above. 
The point is that under these circumstances it needn’t be all that hard to push up wages: the threat of union organizing or a consumer boycott, even moral suasion from the government might be enough. So the standard view that it’s very hard to change the distribution of market income, that policy must involve after-market taxes and transfers, may be quite wrong.

Must-Read: Paul Krugman: Why Am I A Keynesian? - Washington Center for Equitable Growth

Some more clear and concise thinking by Krugman for you. Keynesianism is not about big government, but effective government. When there is a demand-deficient recession, government spending is almost certainly the best call. When the economy is working at full employment and and there is a budget surplus, reducing government spending and allowing private consumption and investment to lead the way is the more responsible agenda.

Must-Read: Paul Krugman: Why Am I A Keynesian? - Washington Center for Equitable Growth
We are for effective government works, not a big government for its own sake: private where private belongs; government where it is needed; circumstances alter cases. We are for an informed public sphere, not one that thinks a bigger or more active government is always better: we want to see voters who understand the technocratic pluses and minuses support politicians who recognize them.

Thursday, June 11, 2015

mainly macro: Why Sen is right about what is being done to Greece

I've copied the first paragraph of the below article into this post. It's an evaluation of the current situation in Greece and the EU from an Oxford economist named Simon Wren-Lewis.

mainly macro: Why Sen is right about what is being done to Greece
At first sight the negotiations between Greece and the Troika seem to be simply a battle about resources: how much of the pie that is Greek national income their creditors should receive. There have been many similar types of battle over the years - what makes this one unusual is that the creditors have a unique weapon on their side. With primary surplus approximately achieved, Greece’s bargaining position would normally be extremely strong. The Eurozone creditors would be desperate to salvage what they could from their foolish decision to effectively buy some privately owned Greek government debt. The only reason the Troika is able to call the shots is that it can threaten to eject Greece from the Eurozone. [1]

Deep Habits: Spend Six Months to Master Skills - Study Hacks - Cal Newport

Here's a heuristic to use when looking at skill development. Most you probably do not spend anywhere near six months of dedicated effort to learn skills in school. If you look at the number of days in school (180 per year), you would essentially spend every school day practicing a new skill to really master it. This is where independent study and dedication have to come into play if the skill is indeed valuable.

Deep Habits: Spend Six Months to Master Skills - Study Hacks - Cal Newport
Linkner recalls a piece of wisdom common among professional musicians: a new (musical) technique takes six months to master. As he expands: 
I may have understood the scale, riff, or chord…but it took a good six months to internalize it and make it my own. If I wanted to perform something fresh, new, and bold, I needed to begin the learning process six months prior. 
Linkner then makes the natural connection between the world of music and business. The same six month rule, he notes, applies to many skills that might give you a competitive edge in your professional life: 
If you want to become reasonably knowledgeable in Asian currency fluctuations, salmon fisheries, or assembly line logistics, a solid six months of study will bring you to point where you can hold a thoughtful conversation. 
I strongly agree.

Don’t Trust Anyone Under 500: Dale Davidson’s Unconventional Advice for Graduates

Below are a few quotes from a nice article on building a meaningful life after graduation beyond what modern catch phrases and pop writers propose. 

Interestingly, Haruki Murakami, a very famous Japanese writer, suggests in one of his books that you only read books over 30 years old. While not as extreme as the 500 year old cutoff this article recommends, the idea of biasing who you take advice from to older sources is the same.

Don’t Trust Anyone Under 500: Dale Davidson’s Unconventional Advice for Graduates - Study Hacks - Cal Newport
Modern advice tells us to pursue accomplishments. 
Ancient wisdom tells us to live virtuously. 
Modern advice tells us to enlarge the self. 
Ancient wisdom tells us diminish the self for others. 
Modern advice encourages us to achieve work-life balance. 
Ancient wisdom tells us to work hard at building a life.

Stimulus-Recovery-Adaptation in Complex Systems

Below are two pictures from a book I'm currently reading on strength training titled Scientific Principles of Strength Training. While the topic of strength training may seem completely unconnected from school or economics, it couldn't be more important to understanding how complex systems work (i.e. your brain during learning or the economy during the business cycle).


The first picture below describes what happens during a single workout.

Some stimulus is presented during a workout (i.e. running, lifting, etc.), which actually induces a drop in performance due to fatigue. After appropriate recovery, you return to your baseline level of performance and then an adaptation occurs that allows you to perform more work the next time around. Eventually this adaptation reaches a peak before slowly declining again if no new stimulus is presented.

There are a couple important things to keep in mind with this model. The stimulus must be disruptive to homeostasis, meaning you are asking your body to do something it hasn't previously done. If you can do 100 push ups in a row, doing 25 push ups is not a stimulus. You will have to do more to overload your system and disrupt homeostasis.

Second, once you've reached a new performance peak, a new stimulus has to occur. That means in order to improve, ever larger and larger stimuli are required to continue progress. This is where the Navy SEAL motto, "The only easy day was yesterday," comes from. As your performance levels increase, you actually have to work harder to continue improvement.

This leads to the second diagram, which illustrates what several sessions look like over time. As you can see, session one is essentially the first diagram above, except that a new stimulus is presented before the decline in performance begins. This pattern repeats indefinitely if development is to continue with minor deviances to allow full recovery as the stimuli create larger amounts of fatigue.

Now that you understand the process of stimulus-recovery-adaptation, you can start to see it everywhere. For us, the two most important applications are learning in general and economics more specifically.

Learning in General

Learning in general follows this same pattern. Much like your body, your brain is a complex system which requires homeostatic disruption for learning to occur. If you continue to study the same thing you studied yesterday and never increase in difficulty, you won't experience progress (just like the 25 push ups example wouldn't spur progress).

For a student studying math, this might involve attempting to understand basic calculus after learning about algebra and trigonometry. Obviously, this will provide a novel stimulus that is larger than the ones required for the previously mastered subjects in math. That is why we teach students calculus later in school than algebra or trigonometry, just like we ask someone to try 100 push ups after they have shown the ability to do the 25, 50, and 99.


For our class more specifically, the economy is a complex system like the body or brain. That means growth requires stimulus. In fact, economics already has terms like "fiscal stimulus" and diagrams such as the business cycle, which mirror the second diagram above almost identically.

When you view economic ideas like "bubbles" and "overheating" through this new lens, you can understand quite easily that the stimulus leading up to a crash or crisis was simply too big for the current economy to recover from adequately. Stimuli need to be big enough to induce a performance drop so that recovery and adaptation can occur, but not so big that future growth is hampered by the need for excessive recovery that allows performance to decline and return to baseline as the first diagram above shows.

Bubbles are therefore the equivalent of asking someone to do 100 push ups when their current performance level is only 50 push ups. Of course they are going to crash afterwards. The stimulus was too large to adequately recover from. A stimulus of 55-60 would have been more appropriate.

  1. Create a stimulus that goes beyond your previous abilities
  2. Recover appropriately once a performance drop occurs
  3. Adapt to a new peak performance level
  4. Repeat as necessary for continued progress

Tuesday, June 9, 2015

Giffen Goods

Here's a fun type of inferior good that's not on our economics syllabus, but pretty cool to know about. I've actually never heard of this type of good until today. Very counter-intuitive and one of the reasons I love learning about economics.

Giffen good - Young Economists

A Giffen good is an extreme type of inferior good. The negative income effect of changes in price of a Giffen good is actual stronger than the substitution effect. This leads to its bizarre quality: when the price of a Giffen good rises, consumers actually buy more. Veblen goods behave the same way for very different reasons. 
To understand how this happens, consider the example of a Giffen good for which there is the best evidence that it is a Giffen good. Households in the Hunan province of China were shown to buy more rice when they had to buy it at a higher price, and less when the price they paid was subsidised. 
The reason for this is that, even when expensive, rice was still the cheapest source of calories available. Therefore, when the price of rice was cut, households had more money left over after buying rice. Some of this was spent on buying more expensive foods (meat, vegetables and fruit), which reduced their need for rice.
From Wikipedia
In economics and consumer theory, a Giffen good is a product that people consume more of as the price rises—violating the law of demand. For any good, as the price of thegood rises, the substitution effect makes consumers purchase less of it, and more of substitute goods; for most goods, the income effect (due to the effective decline in available income due to more being spent on existing units of this good) reinforces this decline in demand for the good. But a Giffen good is so strongly an inferior good (being more in demand at lower income) that this contrary income effect more than offsets the substitution effect, and the net effect of the good's price rise is to increase demand for it.

Saturday, June 6, 2015

Krugman Thinks Well.

Below is an excerpt, but the entire post is good and only a few additional paragraphs beyond the ones shown. Krugman's critical thinking skills are what are impressive here, not his actual economics one way or the other.

Make claims. Support them with evidence. Analyze and evaluate your own views and beliefs as needed.

Why Am I A Keynesian? - NYTimes.com
So, am I a Keynesian because I want bigger government? If I were, shouldn’t I be advocating permanent expansion rather than temporary measures? Shouldn’t I be for stimulus all the time, not only when we’re at the zero lower bound? When I do call for bigger government — universal health care, higher Social Security benefits — shouldn’t I be pushing these things as job-creation measures? (I don’t think I ever have). I think if you look at the record, I’ve always argued for temporary fiscal expansion, and only when monetary policy is constrained. Meanwhile, my advocacy of an expanded welfare state has always been made on its own grounds, not in terms of alleged business cycle benefits. 
In other words, I’ve been making policy arguments the way one would if one sincerely believed that fiscal policy helps fight unemployment under certain conditions, and not at all in the way one would if trying to use the slump as an excuse for permanently bigger government. 
But in that case, why am I a Keynesian? Maybe because of convincing evidence?

Friday, June 5, 2015

A Series of Interesting Posts over at Marginal Revolution

Below are a series of links to posts from George Mason University economist Tyler Cowen at Marginal Revolution. The first two were posted yesterday and today respectively. The third is a link from the blog posts by Cowen providing "evidence" of the effectiveness of being a miser. All of these posts discuss a recent gift of $400 million to Harvard University by a wealthy donor.

Did the Wisconsin state system just abolish tenure?

A tweet in the form of a blog post, with an addendum, #Paulson, #Harvard

What I Like About Scrooge

It seems to me that author is confusing miserliness defined as "excessive desire to save money; extreme meanness" with asceticism, which is defined as "severe self-discipline and avoiding of all forms of indulgence, typically for religious reasons."

In any instance, the entire debate seems to hinge around the marginal benefit supplied by Harvard receiving an additional $400 million on top of its already huge endowment of $36 billion. I'd imagine the marginal benefit is quite small, which implies the opportunity cost of this donation is quite large as $400 million is capable of having dramatic impact when given to another organization whose marginal benefit would be quite higher.

Even excluding the moral weight a decision like this carries, we can look at the marginal propensity to consume (MPC) of various economic classes to decide this isn't the best use of $400 million from an economic standpoint. Harvard essentially serves the most elite of the economic world. The wealthy have a lower MPC than the poor and so a gift of this magnitude would have a larger economic effect on growth by ensuring it gets into the hands of the poor instead of the elite.

Thursday, June 4, 2015

What Is the Keynesian Multiplier in Real Life Anyway?

Below is short excerpt from a recent article by Paul Krugman talking about the fiscal multiplier (Keynesian multiplier). According to him, the research is recent years points to the actual number being around 1.5. That means that rGDP would go up $1.5 billion (perhaps a little less) if the government were to spend $1 billion.

The fiscal multiplier — the increase in real GDP per dollar of government stimulus spending, or the fall per dollar of austerity cuts — has assumed a lot of significance in recent years. When Bernstein and Romer assumed that it was 1.5, Robert Lucas accused them of “shlock economics“, and smeared Romer’s professional ethics. Since then there has been quite a lot of empirical work, which generally indicates a multiplier of about … 1.5. 
That said, I still do believe that the multiplier is not much bigger than 1 — indeed, around 1.5; partly because of the econometrics, but also because taxes and transfers act as automatic stabilizers.

Wednesday, June 3, 2015

What is Wrong With Our Culture [Alan Watts]

Below is a video that was shared on FB by one of the other teachers at school. It reminds me of the renown economist John Kenneth Galbraith's book The Affluent Society, which I read in college and still remember quite well.

Growing wealthy is not the point of economics or even personal and individual finance. The point is to enrich your own life and those of others. As the short video quotes Gandhi, "Be the change you wish to see in the world." 

Tuesday, June 2, 2015

Q&A with Richard Thaler, a Behavioral Economist

Economist's View: 'Q&A: Richard Thaler'
Question: What are the most valuable things that you got out of studying economics in graduate school?
Answer: The main thing that you learn in grad school, or should learn, is how to think like an economist. The rest is just math. You learn a bunch of models and you learn econometrics -- it’s tools. Some people who are so inclined concentrate on having sharper tools than anybody else, but my tools were kind of dull. So the main thing was just, “How does an economist think about a problem?” And then in my case it was, “That’s really how they think about a problem?” ...

The Finnish Disease - NYTimes.com

A short blurb from Krugman on the impact of inflexible exchange rates and its effects on recovery for the Finnish.

The Finnish Disease - NYTimes.com

A followup to my post inspired by troubles in Finland: it’s worth emphasizing just how bad Finland’s performance has been. For Finns, the great depression they remember is the slump at the beginning of the 1990s, driven by a combination of a bursting housing bubble and the collapse of the Soviet Union next door. The result was a very nasty slump, and a delayed recovery. But this time, although the slump in per capita GDP never got quite as deep, has been far more persistent:

Why can’t Finland recover this time? Debt is not a problem; borrowing costs are very low. But it’s all about the euro straitjacket. In 1990 the country could and did devalue, achieving a rapid gain in competitiveness. This time not, so that there is no quick way to adjust to adverse shocks

Monday, June 1, 2015

"This is your life. This is the only one you got."

Bill Murray was asked what he wants that he doesn't already have. His answer is great.

As you watch, try to keep the IB mission statement in mind, which states, "The International Baccalaureate aims to develop inquiring, knowledgeable and caring young people who help to create a better and more peaceful world..."

I think his answer is essentially driving at the necessity to be present in order to make the most of this one life we have and make a positive difference in the world. Of course, Murray is much more eloquent and better spoken.