Matt Nolan

Love is a prisoner’s dilemma

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Well that is one of the interpretations from the Google autocomplete results for the search “how can I get my boyfriend/girlfriend to” (ht Offsetting Behaviour).

Why?  Well the third highest result when asking about boyfriends, and the fifth highest when asking about girlfriends is “how can I get my boy/girl to love me again”.  The prevalence of the search suggests that love is something that is valued by both sexes, yet even in terms of a relationship (which is partially just a tacit agreement for providing the service of love) there appears to be an underprovision of love.  (More evidence of a hole in love provision?)

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Matt Nolan

A note of caution for NZ

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Things are generally looking better for New Zealand.  Consumer, business, and forecaster expectations of growth have improved, our trading partners are stabilising, and financial markets are functioning.  Yay.

But one piece of data that leaves me a little cautious is the money stock data.  The broadest measure of the money stock (M3)  declined 2% on a year earlier in November.  This was the largest decline on record (going back to 1960).

Furthermore, following this release the New Zealand dollar has climbed sharply.

If the declines in the money stock are sustained, and the higher dollar is also sustained, there is one clear interpretation – market expectations of demand driven deflation.

Of course, this data is volatile and rising commodity price expectations and the such can be used to explain the change in the dollar, but …

Matt Nolan

Economists and opportunity cost

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The Wall Street Journal has an article that discusses how economists are “cheapskates”. I probably wouldn’t use that term, I would say that economists understand the opportunity cost of different choices and so can pick more objectively between alternatives.

Anyway, what struck me was this passage:

Economist Robert Gordon, of Northwestern University, says he drives out of his way to go to a grocery store where prices are cheaper than at the nearby Whole Foods, even though it takes him an extra half hour to save no more than $5.

So an economics professor only values his time at $10 an hour?  Seriously, what the hell.  This seems like a terrible choice to me.  The only ways I can rationalise this are:

  1. He is exaggerating because he gets some pleasure from that,
  2. He gets some consumption value from driving out to the other supermarket and saving a bit of money.
Matt Nolan

Weak Warehouse result, disappointing Christmas retail?

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That is what is implied by this article in the Herald.

The Warehouse is a huge retailer in New Zealand, and with their Christmas retail sales disappointing this is bound to cause some concern.  However, this does not necessarily imply that the New Zealand retail sector struggled during Christmas.

Why?  Well, many people believe (rightly or wrongly) that the Warehouse generally sells a set of “inferior goods“.  Given this perception, if household experience an increase in their expected lifetime income they may well switch from buying things from the Warehouse and buy things from other places instead.

Even so, there are other indicators that suggest that December was weak.  Everyone could see the strong sales that were occurring before Christmas Day, and in many places there was the feeling that the crowds were a touch on the low side.  We will have a better idea on the 15th, when Stats NZ releases the Electronic Card data for December.

Matt Nolan

Karl du Fresne’s review of Avatar

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Is spot on (ht Offsetting Behaviour).  I can’t remember the last time I got as genuinely bored in a movie as I did with Avatar.  The scenery and graphics were beautiful, but the acting and story were both atrocious.

I tried to enjoy it, hell I even did enjoy it for the first 30 mins.  But over time the lack of story combined with the fact that how “beautiful the animation is” was being rammed repeated and unnecessarily down my throat made me both bored and a little bit irritated.

However, to be fair almost no-one seems to agree with this negative view.  IMDB is currently giving it 8.7/10.  The Dim Post also reviews.

Matt Nolan

Pop lyrics and cognitive biases

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There is an excellent post from Stumbling and Mumbling on this issue, it can be found here.  I love the conclusion:

Now, I don’t want to claim that all of this year’s most popular songs contain howling irrationalities. The mighty Lady Gaga passes muster. But could it be that such irrationalities – as distinct from plain nonsense – are more common now than years ago? If so, isn’t this yet more evidence of the decline of civilization? And what hope is there of people becoming properly educated if they are exposed to such cognitive errors? Will no-one think of the children?

In the comments someone suggests that the lyrics of the Beatles were more rational, and that the rationality of pop singers is declining over time.  However, I’m not convinced that is the case.

For example, in the the “The End” Paul states (and John heartily agreed with) that “the love you take is equal to the love you make”.  Now this is true on average, but I doubt there is any behavioural rule that ensures this occurs for every person.  Such a rule could lead to people “over-investing” in love, in the belief that any they give will be returned to them.