Friday, May 22, 2009

The monster at the end of this blog

The Monster at the End of This Book is now available online. I still tell people how clever this children's book is today. It's very, uh, meta. Read more.

Shorter Bill Donahue:

Molestation doesn't count unless there's penetration! All the other stuff is No Big D. Read more.

Thursday, May 21, 2009

Pop lessons in economics

The first in a hopefully multi-part series.

I can't help but analyze the media I see in terms of economics. There are a lot of good and bad lessons found in our entertainment ripe for the analyzin'. Take, for instance, 2Pac's "Brenda's Got a Baby" from the album 2Pacalypse Now. The song begins with a sort of exhortation. You may think that Brenda's problems are not your business, but 2Pac is going to explain why you should care:
I hear Brenda's got a baby
But, Brenda's barely got a brain
A damn shame
The girl can hardly spell her name
(That's not our problem, that's up to Brenda's family)
Well let me show ya how it affects the whole community
In economics, we describe spillover effects as externalities. A transaction may be mutually beneficial but socially harmful. The standard example is pollution. You want to buy heating from your home, a provider wants to sell you electricity, so you both profit. But the burning of fossil fuels creates smog, etc. that harms a third party.

Externalities can range from high-profile planetwide events (global warming) to the totally innocuous. For instance, if I buy an ugly shirt that I like a whole lot, I and the shirt vendor both benefit whereas you suffer a minor externality; that is, you see my ugly shirt and hate it. Since this is extremely common, we tolerate most externalities.

It's important to distinguish between internalized and externalized costs. Yes, making a t-shirt uses cotton, polyester, ink, machines, and so on, which all cost money. But those costs are internalized. The shirt manufacturer outbid other people who wanted to use those things, meaning they went to the person with the highest preference for them. Depriving other manufacturers of those goods is "efficient" (i.e. it satisfies willingness to pay requirements). Other manufacturers wanted to use those goods, but they didn't want them as much as the t-shirt manufacturer. There is no need to use political action to adjust these costs unless you have good reason to oppose efficiency as a rubrick.

Externalized costs spill over onto third parties not involved in the transaction. I may value breathable air, but since I am not involved in the manufacture or purchase of your t-shirt, I don't have a say. Pollution is an externalized cost, one that we often wish to solve through political action.

So when I hear 2Pac say that Brenda's pregnancy affects the whole community, it almost certainly does--but then what doesn't affect the whole community? Few people actually oppose any sort of action just because it "affects the whole community" (though there are exceptions), so what I'm listening for is an explanation of the externalized costs involved. How does Brenda's getting pregnant invoke significant social costs on her neighborhood?

Unfortunately, 2Pac fails to provide. The rest of the song details how Brenda's sad situation affects Brenda. (You can read the lyrics here.) Brenda gets dumped, is not smart enough to know who to ask for help, has the baby, gets abandoned by her family, turns to selling drugs, finally turns to prostitution, and gets murdered.

Little of this affects the surrounding community in any significant way. Some of the community members may be offended by drug-selling or prostitution, but "offense" is not usually considered a significant externality. Again, with exceptions. In the U.S. we seem to use this criterion alone to ban prostitution, drugs, the sale of organs, and so on. But thinking in efficiency terms, political action is only economically justified if the collective amount the offended is willing to pay outweighs the collective amount the transaction parties are willing to pay. The song notes that nobody cares about Brenda, including her family, so it's safe to say that few people in her community would be willing to pay Brenda not to sell drugs or sex. Selling drugs and sex to customers is a benefit, not a cost, so we can't count that. The customers get drugs and sex, Brenda gets money, and they both profit from the transaction.

One could argue that Brenda is too young or stupid to be selling sex. She can't adequately weigh the costs and benefits of her actions, and therefore makes bad decisions. That argument is fair enough, and almost certainly true (2Pac emphasizes her young age and low IQ). But this is an argument that what Brenda perceives as a net gain is really a net loss. This affects Brenda's costs, not the whole community's. There is still not an externality--Brenda's increased costs are offset by the gains to her customers, who would not get her services if she were smarter.

This is where efficiency standards might fail. One might argue that Brenda's costs are more important than her customers' gains. Because of her special status (as an underaged, undereducated rape victim), we have to weigh her costs and benefits differently. I can buy this argument--fully support it, even! But we still haven't established any externalized costs on the community aside from ordinary ol' "I take offense at that!"

From what I can tell, there are none to be found. Brenda gets robbed as a drug dealer and murdered as a prostitute. Crime certainly has spillover effects, but these are the result of criminals' actions, not Brenda's. Drug selling is not an inherently criminal-laced activity. In the U.S. we sell drugs (alcohol) legally all the time with few more robberies than you'd expect from any retail store. So now we have an externality, but not one caused by Brenda's actions. The community is affected by robbers and murderers, not by dumb girls having children.

(There might be an argument that Brenda's child is especially likely to grow up to be a robber or murderer. This is the case made in Elvis's "In the Ghetto." But that's another story.)

The closest thing I can find to a community-wide cost is a mention of social workers. Social workers are taxpayer funded, meaning that other people in the community are subsidizing the care of Brenda's baby, which could be inefficient if they don't actually want to do so. Brenda is less likely to have a baby to begin with if she doesn't have that eased burden.

Somehow, I don't think "we need to reduce government programs to reduce moral hazard" is the theme 2Pac was going for.

Until next time, kiddos! Read more.

Wednesday, May 06, 2009

Rhythm Heaven

In case you don't feel like reading this, I've provided a TLDR version:
People who play videogames are annoying. I can make fun of them using real theories from real scientists. You should play Rhythm Heaven for the Nintendo DS.
I haven't been posting much because, hey, the end of the year in grad school is a busy time. Tonight is my first (and probably hardest) exam. Yesterday, my roommate commented, "You've been studying all day, how much more studying could you possibly have to do?" I had to control my rage.

However, I have had a little bit of time for videogames. So let me tell you about Rhythm Heaven.

Or, actually, first let's read the stupidest thing ever written. The author of VG Cats, see, thinks that the world owes him something because he used to be a social outcast for his love of videogames. Actually, for the younger generation videogames have always been mainstream--do you know anyone in their 20s who hasn't played Super Mario Bros. 3? But the really funny thing, besides the comic not containing any actual jokes, is that, yes, I have played a great game recently. A great, wonderful, spectacular game; a game that, only 3 years ago, would never have been localized for the United States, and only those emulator-happy nerds would ever have known how awesome it was.

I say "only 3 years ago" because I'm talking about Rhythm Heaven, the DS sequel to Rhythm Tengoku, a GBA game that was great, wonderful, and spectacular, that never got released in the United States, and that only emulator-happy nerds ever played.

And to top it off? It's a casual game if there ever was one.

In fact, it's nothing but a collection of musical minigames. Each game asks you to do some simple task--tap the stylus to the beat, flick the stylus at the top of a musical scale, repeat some musical phrase by a combination of tapping and flicking. And that's it. The rest is all charm. In a game of ~50 different minigames (some of them repeats, yes), there was only one that I didn't completely love--the only one in which the accompanying visuals made finding the rhythm more difficult rather than less.

I can hardly describe what's so great about it. When you see videos of it, you're more likely to think, "What's so great about that?" And, well, what's so great about it is that 1) There's a whole lot of variety and cuteness, the songs are short, and the game even lets you skip the stages you can't beat, so it's pretty much impossible to get bored of it until you're finally done with the whole thing or you just kinda hate rhythm games, and 2) Oh man the remixes. After you complete four stages, the game gives you a remix stage to play, which cobbles all four previous stages together into one omnisong. The first part of this video is my favorite remix thus far. Maybe that will give you an idea of the diversity and charm on display here.

So anyway, back to that awful comic. Thanks to studying economics and cognitive bias, I actually have a s-c-i-e-n-t-i-f-i-c! explanation for how self-described "gamers" manage to get both the "modern games suck" and "casual games suck" points so awfully wrong all the time. First, rosy retrospection and the availability heuristic. People seem to have a tendency to rate past events higher in the future then they did when the events first happened. They also seem to remember more surprising, shocking, etc. events better than others. This causes them to overestimate probabilities by focusing on what's in their memory and ignoring base rates. If you were to ask a "gamer" the percentage of NES games that were TOTALLY AWESOME OMG out of the total, they'd remember the great games they played, remember some of the especially sucky ones, forget about some of the more mediocre ones, and completely ignore the fact that there are about 800 of the freakin' things, and the case gets only worse as videogames became more popular. (Wait, is the PS1 too late in the game for "gamers" to revere it as still being "hardcore"? I don't think it is, but maybe I'm missing some secret gamer's code or something.)

Furthermore, signaling theory explains the exclusion of even totally great "casual games." Gamers, diminished to a low status by society--and no, my little webcomic author, you did not reject society and become a social outcast for the sake of videogames; you couldn't talk about anything else, and it annoyed people, so they stopped talking to you--sought hierarchies among themselves. Status hierarchies are an extremely important factor in human psychology. We can't get away from it, even when we try. So, trashing casual games may seem stupid to you and me, but to people whose focused status-seeking behavior lies in how they play videogames, it's imminently important to make yourself look more important, smarter, or otherwise better than the unwashed masses who play casual games. The cost of missing out on Rhythm Heaven is lower than the cost of being a plebe. Remember, mockery from the likes of me isn't gonna hurt any feelings; I'm on the "outside" anyway. But a loyal following of webcomic readers who all agree with you puts you higher up on a hierarchy.

Besides, you can always just go back and play Rhythm Heaven on emulator when everyone's forgotten about it. Or, better yet, go back and say that you liked Rhythm Tengoku way before Rhythm Heaven ever came out, and Rhythm Heaven is totally just a watered down version (or whatever) and it's so not as cool. You might be able to get away with this; after all, casual games are totally ok as long as they're Japanese. Read more.

Monday, May 04, 2009

Austrian Economics Jokes

Tyler Cowen requests jokes about Austrian economics. Some of the submissions in the comments are pretty good! Read more.