Does the bundle explain it?

Defaults are a design tool to frame thinking. One designed-default is mean reversion. For most situations, said Cade Massey, “Try regression to the mean on for size and see if that can explain it.” Another is to start with the base rate: what typically happens in situations like this? During the Summer of 2021 there were many comparisons of vaccinated and unvaccinated Covid infection rates. This was a case of base rate neglect.

Mean reversion and base rates are good starting ideas because they prevent our Narrative Spin Drives from jumping into high-output mode. For instance, there’s an annual NFL video game known as Madden NFL. There’s also a Madden curse. If someone appears on the cover they have a terrible season after. It’s happened to eighty-two percent of the athletes!

Or it is base rates and mean reversion. To earn the cover rights, a player must have an excellent season, and their “success equation” benefited from a few lucky bounces. That happens. But bad luck happens too.

To add to the value of starting with base rates and mean reversion we can add “The Bundle”: the idea that a JTBD is a collection of things.

Marc Andreessen talked about the bundle of education: a dating scene, knowledge, social interactions, signaling, potential professional connections, cheap financing, and so on. Part-of-the-reason education innovation hasn’t gained distribution is that online only addresses parts of the bundle. It’s hard to date or build friendships on a video call.

Another bundle is the meal. Every meal is a combo meal: social interactions, nutrients, calories, taste, and so on. We can see bundles further yet. Food is more than the sum of its vitamins and nutrients. Eating an orange is more than theVitamin C, fiber, and sugar.

Work is a bundle too. Economist Tyler Cowen often notes that part-of-the-problem with Universal Basic Income is that it doesn’t address The Bundle. From NPR:

“Companies, like those in the tech industry such as Google and Apple, built enormous offices and put them all right next to each other in Silicon Valley and the office expanded what it was in people’s lives. They became like a second home. They had fancy food, concerts, dry cleaning, free meals.” – Stacey Vanek Smith, Planet Money, August 2021

Okay, a confession. I love Ted Lasso. It’s my favorite show since Parks and Rec. What I admire about Lasso is that he sets a tone (assuming for a moment it’s a real football club but this ethos may exist in the real production). Players begin the day and “Believe”. That’s what starting with base rates, mean reversion, and the bundle does too. Starting with those prompts prevents the Narrative Spin Drive from generating primarily palatable explanations.


One thing I’ve changed my mind on is reading fiction. Fiction, like Ted Lasso, appeals to us because it is a fake premise sharing a human truth.
Also, the idea of online education needing distribution is from Alex Rampell, a colleague of Andreessen, who asks: Will disruptors gain innovation before innovators gain disruption? This is the “TiVo Problem.”

Apples to apples in Iceland

The basic base rate question is: what should I expect in situations like this? Most often we have looked at base rates through the lens of projects. We have an optimistic tendency to think, “yeah but…”. Sometimes it is! Sometimes it’s not.

but it might work for us

The general advice for using base rates has been to start with them, rather than our impressions, and then adapt from there.

Another way to think about base rates is as sampling. It’s important to get the “situations like this” part right, right? This is tricky, and this came up during the summer of 2021 as more and more covid vaccinated people became infected with the covid virus. At one point 67% of Iceland’s cases were among the vaccinated.

“When you look at Iceland and graph out (cases) by who is vaccinated, who is not, and where the cases are, you can see that there are more cases in the vaccinated group than the unvaccinated group.” – Dr. Kat, NPR Planet Money, August 2021

That sounds like the vaccine doesn’t work, or doesn’t work as well, or never-worked?! Maybe, but maybe our conclusions are muddied by an initial assumption that’s wrong.

Rather than jump right to Iceland, let’s pull a Zeckhauser and simplify everything. Imagine in Indiana there is a group of 100 people, half are vaccinated and half are not. In the vaccinated group there are five infections and in the unvaccinated group there are five infections. Putting aside “long-infection”, hospitalization, and death, it-looks-like, in-this-case, that the vaccine is meh.

Okay, now in Nevada there is another group of 100 people. This time there are 90 which are vaccinated and 10 are not. In the vaccinated group there are five infections and in the unvaccinated group there are five infections. Putting aside the same other-factors, in this case the vaccine is doing a lot of work! This was the case in Iceland too. Six of every thousand vaccinated people caught covid while fifteen of every thousand unvaccinated people caught covid. And all of the other-factors were much worse for the unvaccinated group. Vaccination reduced someone’s risk by more than half.

This idea is known as the “base rate fallacy” but really it’s comparing apples to apples which will make the idea stick better anyway(another bit of Zeckhauser advice is to keep explanations simple). BRF is good for talking with economists and behavioral scientists but for implementing this idea it’s an apple-to-apples question a day that will keep the bad decisions at bay.

Creative Operations

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.

3 prompts to being Bayesian

How much should new information matter? Or, is this time different? Because sometimes it’s not.

“Merlin (Heidemanns) said that essentially the polls gain more weight. It’s not that we construct a model and weight the polls. We don’t take a weighted average of the polls, we estimate latent parameters and the polls are data. That said, you can roughly approximate the estimate as a weighted average.”

Andrew Gelman

According to Gelman, priors like “the economy, stupid” never exit the model. According to Nate Silver, the final poll removes all prior data.

In college sports priors matter more than Gelman allows for politics. Nearly two-thirds of college basketball teams who start a season ranked in the top-25, finish in the top-25. College football is the same.

How much new information should matter is a tricky question, but it’s helpful and why the Wharton Moneyball co-hosts encourage each other to become more Bayesian.

At the start of a football season we can guess (or hope) on a team’s chances. With more information, each play, game, and season, we update our idea. Eventually our guess at the start of the year gives way to the information of the year.

It’s hard to do though because we don’t know is this time different. Most of the time it’s not different enough, and base rates work best. But there are three general frameworks which might help us become more Bayesian.

First is to ask a Marc Andreessen like question: is software eating the world? How has the system changed and what does that mean? From FAANG to Testa joining the S&P, it seems like a systemic shift toward technology. Ditto for passing in football.

Second is to ask the Michael Mauboussin question: how much of this was luck? There’s a lot more luck in a single football play than an entire football game. It’s always a mix of skill and luck, but in what ratio?

Third is to consider our identity: am I attached to a position for unacknowledged reasons? This category includes biases like sunk cost and personal influences like ego or status.

The 2021 vaccine rollout is a good instance of practicing Bayesianism. Start with the base rate for vaccines. Watch for evidence. Adjust accordingly.

Baseline data

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One of the coronavirus problems, one of any system’s problems, is lack of good data. When data is precise and simple it’s just a math problem. This is why we have to gamble with coronavirus.

In mid-March I started to feel kinda ill. Did I have it? Everything pointed to yes.

I’d traveled through airports. I felt congested and achy. The news talked more about coronavirus than allergies. Wait. What? The noise of the news made me overlook the color of my car, which was a nicely tinged yellow thanks to an above average pollen count in central Florida. 

My problem was that the ‘fifth vital sign’ had overtaken all the others. Or put differently, the only data I was using was highly subjective. Instead of continuing my confoundedness I started counting. 

IMG_5490.jpeg

Regularly tracking my temperature showed nothing to worry about.

The other potential problem at the the time was toilet paper. 

Well before we were storming stores and short sheets I had stocked up. But watching the paper pandemonium I had no idea how long our stockpiles would last. So, I counted. Our  conservative count is two rolls per person per month. Prior to counting, I’d never have known.

Now do emergency funds

Good data is an objective tool to use alongside the subjective. If we kinda feel ill, we can take temperatures. If we see toilet paper rolling out of stores, we can use a rule of thumb. If we’re worried about finances, we can compare spending to savings. Good data is the base rate, our adjustments are the subjective. 

In any quantitative field three things matter: counts, computations, and communications.

Without accurate counts, we know nothing. 

Without accurate counts and computations, we infer nothing. 

Without accurate counts, computations, and communications, we do nothing. 

Sometimes we jump the gun. We build a model and share it to the world. #dataisbeautiful. Sometimes though we just need to start at the beginning and count. 

Thanks for reading.