Curated Creativity

MIKE

Broadly there are 3 ways to spend a day online.
– trends, the algorithm or human generated headlines
– feeds, the self selected sources
– search, the internet queries of Wikipedia articles, travel plans, and what-is-my-kid’s-teacher’s-email

Articulating the ways helps distinguish when we are, or aren’t in a helpful place. On days when it’s time to work it isn’t helpful to spend too long in the trends. Naming also helps us establish healthy habits. Jason Zweig uses the fire hoses and tea cups system.

The 3 ways aren’t good or bad. They are more helpful or less helpful depending on the work to be done. Here’s some help for the feed type of work, two curated podcast feeds.

Economics. Tyler Cowen is a wonderful thinker we have looked at many times: how to eat well, how to argue well (with yourself!), and how to consider incentives. Cowen is a podcast host and frequent guest but more importantly, he shares many potential podcast people on his blog Marginal Revolution.

Periodically I cull through the blog for the MR Mentions podcast feed. These are guests or ideas mentioned by Cowen. It’s not a comprehensive list and it runs through my own filter, but it is a way to think a bit more like an economist.

Behavioral Science. Rory Sutherland is a wonderful thinker too. We’ve probably looked at his ideas even more: the room or Zoom, marathon lottos, and ambiguity aversion are just some places his ideas percolate. Sutherland has hosted Nudgestock, a B.S. conference since 2014 (the presentations are on YouTube!), a great index of thinkers.

Periodically I cull through a Twitter list of Nudgestock guests to find podcast episodes for the Behavioral Listenings podcast feed.

The pitch. These feeds are free and both contain potentially valuable ideas. The main cost is the time to listen, however with the advantages of 1.5x speed, wireless headphones, asynchronous listening, and portability those costs are reduced. Plus there’s no psychological baggage (sunk costs) to make you stick around. This is my list, not yours, so passing on an episodes is a reflection of my (poor) choices.

Happy listening and cheers to the long-tail of content. Before the fire hose it felt good to “stay abreast”. In 2021 it’s about timing: what do I need to know and when. A good feed is one internet tool.

–

Football ’21 favorites or field?

MIKE2 Comments

“Between the Chiefs, Bucs, Packers and Bills there’s a fifty percent chance of one of those four teams winning the Super Bowl. In other words, you can have those four teams or the other twenty-eight in the league.” – Cade Massey, Wharton Moneyball, August 2021

Take the other twenty-eight! This idea holds in both sports and investing.

One potential bit of mental muck is what we can call Visibility. It is easy to imagine a specific thing happening rather than a range of things happening. Visibility is part-of-the-reason counterfactuals and postmortems are difficult to conduct. That three of the four quarterbacks have in fact won a Super Bowl makes this effect more so. I can ‘see’ one of these quarterbacks winning the big one, but that doesn’t provide helpful information.

Not so fast though.

What is ‘the field’? As Tim Harford wrote, it is as often the words as the numbers which cause confusion (life expectancy for instance). In the case of the NFL, it’s the twenty-eight other teams that might win the Super Bowl.

But is that right? Can every other team win the Super Bowl? While on “any given Sunday” any team might win, stringing together a group of wins to be champion is far less likely.

The central point to Zeckhauser’s Maxims is that reframing a situation may cause our conclusions to change. We used this framework to ask: Was the Ohio Vaccine Lotta a Good Idea? What if we reframe the question around Super Bowl favorites then?

Roughly speaking there are three groups: the Favorites (4 teams), the Chasers (X), and the No Chancers (Y). Now how many Chasers and No Chancers there are is questionable, but the framing changes our thinking. If this is the structure then the relevant idea isn’t the field but a subset of the field: the Chasers. If there are 4 Favorites, 4 Chasers, and 24 No Chancers then the choice changes. Take the favorites. What if there are 4 Favorites, 8 Chasers, and 20 No Chancers? The top twelve preseason favorites have won 85% of the previous 20 Super Bowls.

There’s no definite answer to this Favorites, Chasers, and No Chancers structure but the framing does change how we think about it.

Another mental model is the same mindset we used “Tracking Tom“. The idea there was that there’s more downward variance than upward variance. The same idea holds for the Bucs, Chiefs, Bills, and Packers: those teams are more likely to underachieve. Put another way, it’s more likely that something goes wrong (someone’s quarterback underperforms) than right. The Chiefs and Bills, for instance, both notably outperformed their 2020 Pythagorean figures.
“Uncertainty is generally underestimated,” said Adi Wyner, “and that means that the field collectively have a little bit more probability than you might assign to four teams.” The data agrees. Take the field.

Subtraction’s Value

MIKE

One way to think of a decision is to think of the ‘right’ answer. This has limits. ‘Right’ answers exist within conditional assumptions, and mostly in the mathematics and moral fields. Should I be honest with my partner? has a ‘right’ answer. What’s the optimal distance my 2017 Subaru Outback should follow this other vehicle given these LIDAR, radar, sonar, sonic readings? has a ‘right’ answer. Note, I have no idea how adaptive cruise control works but it is the best automotive technology of the last decade.

‘Right’ answers are limited because of all the conditionals. Self-driving cars are one example. It’s a math heavy domain, the cost and availability of technology (read: number collecting and computing) has fallen, and we’ve never had as many smart-focused-people or as many save-our-collective-butt-companies, and yet it feels slow. Why is self-driving so slow? The conditions! Snow, rain, city, country, semis, motorcycles, bright lights, night lights, desserts, animals, forests, and not least of all: other drivers.

To get the ‘right’ answer to a question like: should the car warn the driver and begin automatic braking? the system needs a pretty tight window of conditions. So if the ‘right’ answer is difficult to come by is there a better option? There might be.

Rory Sutherland’s work comes up a lot here because Rory Sutherland’s work brings up an important idea. Sutherland loves marketing because marketing deals with psychology which is a lot easier to change than the objective thing. Package delivery is an example. Tracking numbers, emails that note your package is on its way, and estimated delivery dates all deliver psychological value. Contrast this with getting a package faster: logistical value, which has a very real cost. It’s not that better package tracking is better than faster package delivery but that it delivers more value than it costs. It’s the same idea of Michael Lewis’ Moneyball: what’s highly (or somewhat) valuable yet costs very little? Sutherland’s tool is psychology. Lewis highlights math. Let’s add another: subtraction.

“It’s an easy problem for a dad to fix, I grabbed a block to add to the shorter column but Ezra had removed a block from the shorter problem. Ezra is normally a horrible subtractor but he plays a lot of Legos and this was an instance where he stumbled upon subtraction.” – Leidy Klotz

Leidy knew how to fix his son’s Lego bridge. Add a block here —>. But Ezra had an idea too. Take a block away here —>.

Whether a situation’s ‘right’ answer is to add or remove is irrelevant – for now. What’s a better car: a Toyota or a Lexus? The question is which costs more?
It’s easy to add. We have a tendency to add. But adding probably costs more and when it’s a costlier implementation but only a marginally better outcome then the better choice might be to subtract.

March 2, 2022 update:

https://twitter.com/DudespostingWs/status/1499065846588657667?s=20&t=Xq3AqM7fl6OkweZh4CnFdg

Sunk cost straws

MIKE

me and my straws

See these green things? They are reusable straws, purchased from Wawa.

A lot of times people say “sunk costs” like it’s a bad thing. Part of Poker’s Appeal is thinking conditionally, and one way to do that is to avoid sunk costs. Here’s Maria Konnikova talking with Annie Duke:

“The chips don’t remember they used to be in a stack this tall and there used to be more of them. All they know is they are chips. It’s hard mentally, but it’s really important to forget what happened and how much you had because bias is going to creep in: I need to make it back, I need to be more risk averse because I can’t lose the rest.” – Maria Konnikova, Alliance for Decision Education, July 2021

Bill Gates says it is “very important” to bring in outsiders in part to avoid sunk costs.

When we say (with hindsight!) ‘sunk costs yada yada’ what we mean is: ‘This person used unhelpful information to make their decision.’ Sometimes the mechanism with sunk costs is ego, admitting we were wrong is hard.

So I won’t admit it. I was right to buy the straws!

My reusable straws are not going to save the world. They are not going to make a marginal difference. But we will use them, and we will use them because of sunk costs. I paid for these darn things so I may as well use ’em. Here, the mental barnacle that usually afflicts decision making navigation can steer me in the pro-social direction. Like a person who commits to working out if only to use their gym membership I dutifully wash the straws after each milkshake, Frappuccino, and coke my kids consume.

How we even ended up with the straws is a testament to the Wawa ordering system. After ordering drinks, the whole screen filled with a picture and prompt offering the straws and I said yes. Only forty-nine cents! While my use is negligible, Wawa’s is not. Our family of four’s lifetime will probably use fewer straws cumulatively than one-week of lunch orders at a busy Wawa. And there’s the trick. It doesn’t make sense individually but it does collectively. It’s a case of Large N small p being used to change the world.

One of the best changes in my life has been to accept things as they are, rather than upset at the way they should be. Things should not be a way, things just are. Human psychology is like that. It’s not that humans have biases but that we have tendencies in how we understand the world. We have sunk costs because that approach works, conditionally.

To be the most right, and affect the most change, we must see the world as it is. That means noticing sunk costs as a tool, and using it as needed.

–
Eric Bradlow of Wharton talks a lot about Large N small p. He also wonders about the “effect size” and with-regard-to straws I have no idea.

Free Meals

MIKE1 Comment

At the start of Dan Levy’s book Maxims for Thinking Analytically, a book about Richard Zeckhauser’s tools for thought, is this riddle: “Mary and Jim want to paint a room together. If Mary painted alone it would take her 2 hours, and if Jim painted alone it would take him 3 hours. How long would it take to paint the room if they paint together?”

It’s not 2.5 hours.

Zeckhauser’s first maxim is: “When you are having trouble getting your thinking straight, go to an extreme case”. We used this maxim to ask: was the Ohio vaccine lotto a good idea? And it probably was.

Danny Meyer uses a version of this maxim too. One of the most important factors for a restaurant’s success is the location. (Overall it’s a hard business). Meyer wants to avoid errors of commission. Even if a restaurant proves successful it is “stuck with” the location. So Danny explores many locations to find something that works and ask an extreme question:

“Sometimes a space says, don’t plant anything here, this place should not be a restaurant. The first question I ask myself when I look at a restaurant space is: would I want this even if it were free?” Danny Meyer, July 2021, The Knowledge Project

Another way to consider this kind of framing is the expression you couldn’t pay me to. One advantage to living in the south, where football rules the roost, is the access to football. If you like it that is. One friend uses you couldn’t pay me to to express her feeling about SEC football games, the same games where tickets can be hundreds of dollars.

Levy’s riddle is easy once we slow our thinking. Thinking fast we average the work, and get 2.5 hours. Thinking slow(er), like Zeckhauser, and we notice that Mary alone would take two hours. That’s the extreme.

Competing with counterfactuals

MIKE

Peter Attia has this idea called ‘healthspan’. Rather than measure what is easy (years), Attia suggests we aim for something more difficult to measure, but more meaningful: health.

The idea, IIRC from Attia is that it’s the quality of years that matter. Okay, sure, but what does that mean? It’s to ask: what do I want to be able to do when I’m 80? an work backwards from there. If I want to be able to pick up my grandkids then, what do I need to be able to do now?

Working backward is one nice way to frame this idea. Another is to think about competition. Imagine the Healthspan Games.

A proxy for this was Sport Climbing in the 2020 Tokyo Olympics. In this event contestants competed in speed, bouldering, and lead courses. Each contestant was ranked by finish and ranks were multiplied for a final score. If someone finished first, fourth, and seventh, their final score was 28.

A competitor must consider how they could compete. Of course it would be very good to be very good at each section, but a slip in the head end is much more costly than a slip at the tail due to the multiplicative nature of the scoring. An initial score of 2x5x8=80 improves by fixing the middle score to 2x4x8=64 whereas a weakest leg fix yields 2x5x7=70. This may not be a case to fix weaknesses first.

Sport climbing is a good proxy for the Healthspan Games because they also have three areas of competition: strength, balance, and flexibility. However the competitors are slightly different. Instead of athletes from different countries, the competition is different versions of oneself. It’s the you that does yoga against the you that does not. The different versions of you are a counterfactual.

“Counterfactuals are hard because we don’t think about what is on the other side. ‘What if we had done nothing; How many games would we have won?’.”  – Sam Hinkie to Zach Lowe, April 2016

Counterfactuals and competition are one way to reframe the idea of: how to be healthy. It’s easy to think about weight (lost or lifted) or speed while running as the important aspects. But the competition is more varied than these very visible areas.

Are strength, flexibility, and balance the most important parts for a long Healthspan? Probably. Does framing them this way make them easier to think about? Probably too.

–
We return to the idea of easy to measure vs helpful to measure in the “metric” tag.
IIRC = if I recall correctly

A confusing life expectancy calculation

MIKE2 Comments

“Statisticians are sometimes dismissed as bean counters. The sneering term is misleading as well as unfair. Most of the concepts that matter in policy are not like beans; they are not merely difficult to count, but difficult to define…the truth is more subtle yet in some ways easier: our confusion often lies less in numbers than in words.” – Tim Harford, The Data Detective, 2021

One of Harford’s goals is to help people understand the world more as it is and less as they wish it. Harford kindly covers ideas like base rates, sampling bias, and algorithm associations.

That last one has some quite funny anecdotes. For instance, one AI system was trained to distinguish healthy skin from cancerous skin. Crunching and comparing over and over are two things computers do really well, so this seemed a good fit. And it was! The AI categorized correctly. But computer code is like a mango slicer – it has a singular use. In the case of the skin cancer, what the AI “learned” was that if a ruler was present it was cancer.

That’s funny.

But also not. One economic principle that’s going to affect (is affect_ing_) work is the idea that as something gets cheaper it’s used more. LEDs and cameras are two recent examples, name an electronic product that does not have one of those. Data too, is going to be part of our lives more, and Harford wants us to think about the numbers a bit more. For instance, what does “life expectancy” mean?

“They take the relative risk at every age and they integrate it. They ask, if the relative risk this year stayed constant forever, how long would someone born today live? That’s where we lost a year, but that’s assuming Covid stays and the year we just had gets repeated .” – Adi Wyner, Wharton Moneyball, July 2021

This isn’t the only way to calculate life expectancy, but it was the way that lead to headlines like, “US Life Expectancy in 2020 Saw Biggest Drop Since WWII, With Virus Mostly to Blame”. That’s true, but is that how most people understood it?

Most of what happens, and Harford starts his book on this idea, is that we think fast. “Biggest drop”, “WWII”, and “Virus” are all oh-boy-this-is-bad bits of information. But we dig in to what the words really mean and things look a little better.

Our tendency to think fast doesn’t have to be a hinderance. We can use this tendency to be more numerate. Books like Harford’s bump up (be Bayesian baby) these ideas. Riddles like: most British men live past the average age help too. A steady dose of numeracy uses the availability heuristic for our own good.

–
Not into the book thing? Harford has great podcast that cover these ideas. Wharton Moneyball is another with more of a sport’s bent. Gambling podcasts too cover these ideas. As Tyler Cowen said, it’s not that these things are VERY IMPORTANT but that if we see them more we update our mental toolboxes so they are marginally more important.

Creative Operations

MIKE1 Comment

Creativity according to John Cleese is “A way of operating.” This smart 1991 YouTube talk, is full of lightbulb jokes and advice on creativity. How many socialists does it take to change a lightbulb?

The problem with creativity is that it seems difficult. It’s like running a 5K for someone who doesn’t run. Like, c’mon, I can’t do that. Cleese nips this complaint right away and offers two helpful pieces of advice.

First, is to be a designer, and we are all designers. We are all designers because designs influence actions. Some designs tightly constrain action, like this Mario 1-1 walkthrough on YouTube. Other designs constrain loosely.

To design for creativity requires two things: space and time. Set the phone to DND. Sit at the desk. As Steven Pressfield notes, put your ass where your heart wants to be. Like a chef ready for the dinner rush Cleese offers his next piece of advice: think.

Rather he says ‘to play’. That’s the second step. Creativity is the subconscious bubbling up and it’s the conscious shutting up.

“As a general rule, when people become absolutely certain that they know what they’re doing, their creativity plummets.” Jon Cleese

Without interruption, think widely.

This will be hard. Most people, says Cleese, don’t like it. It’s hard to just sit or walk or be. It’s hard to just think. Annie Duke faced this. When she coached poker players they wanted to act, to do, to play the hand. But a lot of poker is not playing. Duke’s challenge was to get players to feel like they were poker players while also making good decisions. So, she reframed the actions.

Rather than playing hands as the action, Duke explained that deciding was the action. Thinking through the hands, the outcomes, the pot odds, the base rates and the game-theory-optimal case was what good players did. That was the secret for being a good poker player. This is the secret too, according to Cleese, for operating creatively.

Creative people are comfortable with the lulls. They understand that the time of play is time working on the problem.

There aren’t good metrics for this. There’s no word count. There’s no investment return. There’s no miles or dollars or calls made. There’s nothing to count which means no numbers which means no comparison which implies no value.

Do not fall into this trip says Cleese. Trust that the moments of wide-open thought matter.
After the play it’s time for work.

How many socialists does it take? Five, but they don’t change it and instead insist that it works.

F1 CAC

MIKE2 Comments

Customer Acquisition Costs might be the most fun business topic because it offers a lot of room for creativity and a CAC near zero makes the unit economics much easier.

One way to think of CAC is like a Nigerian Prince: how do I find my ‘customers’ cheaply so that the resource intensive activities are focused on the ones most likely to ‘buy’.

Via Business Breakdowns:

“This is probably the area where Liberty has done the most in the shortest amount of time, where what’s going on behind the scenes has changed quite a bit. They’re fine with paid TV but also want to make sure there is access to live TV to keep the F1 fan base engaged.” – Arman Gokgol-Kline

There is an opportunity cost to giving away content, but that must be balanced with the customer acquisition costs down the line.

We’ve highlighted some fun CAC ideas like viral marketing (Zillow), email signatures (Hotmail), coupons (Netflix, AOL) and bundling and reframing (McDonald Happy Meal). One addition here is beauty.

This isn’t brand new. One insight that led to AOL CD proliferation was that people will open (direct) mail that feels substantial. Rory Sutherland harks on this too: no one has ever thrown away a substantial 9 x 12 package addressed to them.

This is Todd Synder’s angle. His catalogs are purposefully beautiful and meant to be left out. The aim, said Snyder, is to have the recipient’s partner see it and say something like ‘You would look great in these clothes’. This catalog angle is decades old. Sears supposedly make their catalog’s footprints slightly smaller than the competitors so that when the housewife tidied up, the Sears one came out on top.

It’s easy (but not cheap) to buy customers. It’s not simple (or easy) to have customers find you. But a low CAC has a high value.

Thanks to Tren Griffin for repeating the ideas of CAC and LTV so many times they’re a well-worn mental model.

A confusing life expectancy calculation

MIKE

“Statisticians are sometimes dismissed as bean counters. The sneering term is misleading as well as unfair. Most of the concepts that matter in policy are not like beans; they are not merely difficult to count, but difficult to define…the truth is more subtle yet in some ways easier: our confusion often lies less in numbers than in words.” – Tim Harford, The Data Detective, 2021

One of Harford’s goals is to help people understand the world more as it is and less as they wish it. Harford kindly covers ideas like base rates, sampling bias, and algorithm associations.

That last one has some quite funny anecdotes. For instance, one AI system was trained to distinguish healthy skin from cancerous skin. Crunching and comparing are two things computers do really well, so this seemed a good fit. And it was! The AI (read: computer code) categorized correctly. But computer code is like a mango slicer – it has a singular use. In the case of the skin cancer, what the AI “learned” was that if a ruler was present it was cancer.

That’s funny.

But also not. One economic principle that’s going to affect (is affect_ing_) work is the idea that as something gets cheaper it’s used more. LEDs and cameras are two recent examples. Data too, is going to be part of our lives more, and Harford wants us to think about the numbers a bit more. For instance, what does “life expectancy” mean?

“They take the relative risk at every age and they integrate it. They ask, if the relative risk this year stayed constant forever, how long would someone born today live? That’s where we lost a year, but that’s assuming Covid stays and the year we just had gets repeated .” – Adi Wyner, Wharton Moneyball, July 2021

This isn’t the only way to calculate life expectancy, but it was the way that lead to headlines like, “US Life Expectancy in 2020 Saw Biggest Drop Since WWII, With Virus Mostly to Blame”. That’s true, but is that how most people understood it? Does if this previous year repeated forever seem like a good conditional?

Most of what happens, and Harford starts his book on this idea, is that we think fast. But we can use this tendency to being more numerate. Books like Harford’s bump up (Bayesian baby) these ideas. Riddles like: most British men live past the average age help too. A steady dose of numeracy uses the availability heuristic for our own good.

–
Not into the book thing? Harford has great podcast that cover these ideas. Wharton Moneyball is another with more of a sport’s bent. Gambling podcasts too cover these ideas. As Tyler Cowen said, it’s not that these things are VERY IMPORTANT but that if we see them more we update our mental toolboxes so they are marginally more important.