Always buy two new cars

I’ve been driving my wife’s car a lot lately. Her car is nice. It’s smooth, it’s got more room, and it has bells and whistles. It’s always had these things but I’d never noticed.

It’s refreshing to notice instances of relative rather than absolute value. Her car is nice relative to mine but not so nice relative to the newest thing for sale. After driving her car I kinda wanted a new car.

Like made up start ups, the advice to ‘always buy two new cars’ is half a joke. Much of the personal finance advice around here is to choose from pretty good options. Emergency funds should be generally right, both 15 and 30 year mortgages are good choices, and personal finance expertise is from experience not eduction.

To buy two new cars then means that the relative value of the next new car will be largely hidden from me. Sure there will be neighbors and Ubers and advertisements but I make – we make – easy decisions. If it’s not easy to compare then it’s a comparison that won’t occur.

Ironically I noticed this idea with iPhones a couple of years ago. It only mattered that the phone was newer, not that it was newest. All value is perceived value.

The ball bet

What are the odds of more than twelve named Atlantic hurricanes in 2021? That Bitcoin will top 75K in 2021? More than 2M travelers through TSA in a single day?

These, and more, were part of the 2021 predictions. That post built on the ideas of Superforecasting, which offers ideas towards better predictions. Julia Galef adds another.

Here’s one of the prompts: Will I lose power at my home in Central Florida for more than three days? I figure these odds were about 10%, and would wager that, no, we will not lose power for more than three days.

Imagine another prompt. In this bag of twenty balls there is one red and nineteen black, pick the red one and win. Okay, simple enough. There’s a five percent chance to win the red. And here’s Galef’s guise, you can only play one game.

Do I feel more confident about the hurricanes making landfall or the finding of the red ball? The hypothetical ball bag bet can slide up or down: 5%, 10%, 30%, etc.

“You just ask yourself, do I feel more optimistic about taking that bet or [the other]…You can play with the ratio of balls to kind of narrow down the number you put on your confidence in the original question.” – Julia Galef, BBC’s More or Less, August 2021

With my kids we use coin flipping. One day I had an appointment and told them there was a 5% chance they would have to go to after care at the school. “That’s like flipping a coin and landing on heads four times in a row” I told them.

Probabilistic thinking is difficult but it can be helping in making good decisions. Poker’s appeal highlights this idea too.

The TSA’s nadir was 87,000 travelers the week of April 13 2020, down 95% from the same week in 2019. In 2021 that number was more than one million. The week of June 11, 2021 there were more than two million travelers. I guessed there was a seventy-five percent chance that would happen.

Just the first day of camp

Stand up comedy is the fruit fly of the comedy world. Comedians can think of an idea in the morning, expand it in the afternoon, and perform it that night. Nothing is above the laugh and the feedback is fast and firm. Jokes work or they don’t.

Covid, no laughing matter, has been similar. Though not as fast or firm, the cycle between idea, test, and results has been pretty good. Though clear-ish now, vaccines, hand washing, masks, social distancing, lockdowns, etc. etc. etc. have been a figure-it-out-as-we-go kind of thing. There’s a lot we didn’t know, and still don’t know.

Another area where we know more is our sense of costs and benefits. For instance:

“Send your kid to camp the first day. When they come home they won’t have Covid, because they didn’t get Covid on the first day of camp and they will be like, ‘Wow, camp was amazing.’ The normalcy makes the other pieces vivid.” – Emily Oster, September 2021

What Oster does nicely here is frame the Covid camp trade off for people who overweight the risk from Covid for kids and underweight the reward from camp. During ’20 & ’21 Covid has been all we think about, and we need a reminder about this other stuff. A small step – the first day – is a good approach for highlighting this balance.

We haven’t always known that kids are mostly okay. We haven’t always known that camp is mostly ok (maybe up to 20,000 people?). We’ve learned that being younger is better. We’ve learned that local conditions matter – a lot! We’ve learned a lot.

Framing information one way rather than another is one of my favorite themes.

It’s all solutions

A Chesterton Fence is the idea that we should understand a thing before we change it. Marc Andreessen tells the Chesterton Fence story of Airbnb. Prior to online marketplace for homes and rooms were hotels and prior to hotels were bed and breakfasts. These bnbs varied and so hotels created brands and brands gave consumers information. It’s this kind of hotel. Brian Chesky et al. figured out that rather than brands, the same information could be in reviews and ratings.

“I want to change the way people see the modern world. I want people to look out at the world around them: at the steel, at the concrete, the glass, the computers, the washing machine, the automobile and jet plane and I want them to see everything made by human beings and understand it as a solution to a problem. There was some problem that we had in the past and we solved it. I think when you start to see the modern world as, ‘I am surrounded by solutions to problems’ you start to appreciate it a lot more.” – Jason Crawford, June 2020

That’s awesome. Everything around me is a solution frames the world as such a cool place.

Everything framed as a solution also nudges people towards a bit more curiosity. If a 401k or a mask policy or an expressway interchange is a solution then why was it that rather than something else? If we use hotels or stores or cars why was that the solution?

Solutions, all the way down.

Crawford’s episode came up on a curated podcast playlist I source from Tyler Cowen’s posts. Cowen is one of the most influential thinkers. Here’s a pay-what-you-want thirty-minute read about a few things I’ve learned from Cowen. Or, if you’re really into the coolness of ‘stuff’, try the book Stuff Matters on Amazon.

Triangle problems

How do you fit the triangle in the circle?
the triangle problem

One way to think about Alchemy, said Rory Sutherland, is to think of a Sudoku puzzle. In Sudoku each column, row, and 3×3 box must have one through nine once and only once.

Sutherland’s suggestion is to shift back and forth between the rows, columns, and boxes. We’ve highlighted donation alchemy, wine alchemy, and magazine alchemy. Alchemy is like moneyball find secondary things that deliver value. An easy addition, from Sutherland, is good wifi and good seating.

Another way to consider Sudoku situations is as a triangle.

“This is why I like being in the field of addiction. It isn’t just about ‘the drug’ and it’s not just about ‘the person’ and it’s not just about ‘the society’. It’s about all three, it’s this triangle between social factors, personal factors, and drug factors. It’s a very complex equation but it’s fun because you can see different parts of the world and different weightings and different outcomes.” – David Nutt, London Real February 2020

Nutt’s podcast covers a lot of ‘the society’ solutions, where certain locales changed consumption patterns. Mostly the outcome change is about ease. When alcohol is less easy to consume – via where and when it can be purchases or how much it costs – then people drink less.

The triangle feels like a better analogy than Sudoku. The triangle can be rotated like a dial. We can move points A, B, or C or A, B, and C. The triangle also fits with a complex adaptive system view: if we move A down three and over two it will be in the circle but then B will be out. And it could affect C too.

Triangle problems joins our toolbox for problem solving along with: black box problems, profession problems, TiVo problems, and cooking problems. Each of these is a framing, if this is the problem here’s how to approach it.

Thanks for reading.

Machiavellian framing

“The thing that makes The Prince such a timeless and scandalous work,” explained Stacy Vanek Smith, “is the same exact thing, Machiavelli removes morality from the situation.”

Smith is out to talk about her book, Machiavelli for Women and the book’s seed came about when Smith was stuck on her salary. Rather, her salary disparity. In her first job out of college, Smith and two classmates both ended up at the same organization in roughly the same jobs. But, not with the same pay. Rather than plead her case, pound the table, and present data, “I was in an emotional spiral of unjustness and upset and I never asked for a raise.” Smith needed some unemotional advice.

“What Machiavelli does is remove all that. He would probably look at (the salary disparity) as great information to use. Now what’s the best way to go about getting a raise? What’s the best way to ask? What do I do now? That’s why it is timeless, because it’s so smart.” – Stacy Vanek Smith, September 2021

Good framing is a design choice that affects behavior. We can frame self talk by having multiple ‘jobs’. We can frame vaccines as better than being bulletproof. We can frame decisions by asking, would I want this even if it were free? Each prompt changes the reference point and possibly the behavior.

As needed then, maybe some people should be Machiavelli Bayesians. Be slightly more princely, if that works do it again until it doesn’t.

Being (even more) Bayesian

Bayesianism has become my favorite math-idea-that-doesn’t-involve-math. It’s three simple steps. Step 1: have an idea about a thing. Step 2: observe the thing. Step 3: have a new idea based on the observation. (repeat)

There are two tricks to make this work for you. The first is how much to update. Being Bayesian means changing your mind in proportion to the change. Try the expression, “I’m slightly more sympathetic to X,” for example. Saying this acknowledges the new information and massages the ego.

The second trick is where to start (Step one), and we have to start somewhere.

“By not taking advantage of the accumulated knowledge that we have as a scientific community, we are artificially leveling the playing field. We are giving theories with no basis in scientific fact too great of a chance to prove themselves through the data.” – Aubry Clayton, The Conversation, August 2021

Clayton’s context is Covid19, but he touches on a larger point too. How much coordination and decentralized command a system allows.

A decentralized command iterates quickly. From the front lines of fast food to fashion to fights. If an organization wants to move fast, the decentralized command structure works better than coordination.

But while individual agents may be fast, the whole may be slow. Why? No coordination. The scientists in a medical research lab will do more experiments with no oversight or collaboration but they may not make more progress.

Coordination and decentralized command apply to both knowledge and people. Having accurate base rates and priors means coordinating our existing knowledge with the accumulated.

Bayesians even frame things beautifully. It’s not “changing your mind” bur rather it is “updating your beliefs”.

The itty-bitty-shitty-committee

The itty-bitty-shitty-committee is that voice in your head. It’s the chatter.

“The chatter is the zooming in really narrowly on a problem and getting stuck and spinning over and over in ways that are dysfunctional and destructive. We want to get rid of the chatter that gets in the way of your job, your relationships. and your physical health.” – @Ethan_Kross on Armchair Expert

I’ve been in that loop, in that cartoon whirlpool. I’m the bumbling sea captain. I see it. I try to avoid it. I can’t get out of my own way. Which is kind of wild, being the captain of this ship of one. Kross suggests reframing during rough seas.

It’s not a free bag, it’s a bag that’s been paid for. It’s not a free coffee, it’s a free coffee that’s been paid for. I used to advise college students that anytime they saw the word FREE on campus they could interpret that as “Your tuition pre-paid this for you.”

Time is also a good way to reframe a situation. Do I remember a situation like this from three years ago? No. Then I probably won’t remember this one three years from now. This kind of framing was especially good when my daughters were young. My wife used this too only her mantra was: this too shall pass.

Kross’s specific suggestions echoes Jenna Fischer‘s career advice. Fischer said she looks at herself as the CEO and the product. The boss Fischer said that headshots had to be done by a professional. The talent Fischer had to tell her photographer friend.

“Distance self-talking involves coaching yourself through a problem using your own name like you’re talking to someone else. We are much better at advising other people than ourselves…when we use a name to talk to ourself it changes the perspective, it’s a psychological jujitsu move.” – Kross

That’s incredible reframing. And it works!

If we remember. Usually when someone cuts us off on the road they’re an idiot. When we do it it’s because we’re late. Maybe that’s part of it. We see things differently when the information changes and a simple switch in internal dialogue can create big switches outside in our actions.

Dax Shepard and Kross talk about the IBSC around 31:20. The distant self-talk reframing is known as Solomon’s paradox.

Numeracy at Best Buy

We note that numeracy is important but it is hard to box in what numeracy is and how to use it well. Generally it is this idea that numbers explain some parts of the world well and we should use those numbers in a world full of people.


Maybe an example will help:

“The Best Buy Geek Squad was reporting the mean (repair time) to their customers. A customer walks in to get their computer fixed, the part is on backorder, and the Geek Squad would quote the mean time to repair the computer. Of course, that means plenty of people’s repairs were not the average amount of time. So they changed and reported the 95th percentile time. They ranked the past times and now quote that to the customer – which is what people want!” – Elea Feit, March 2018

Like wet bias, maybe we can’t handle the truth. Or rather, maybe the way we see the world makes more sense one way rather than another.

One thing people are pretty bad at is randomness. We use stories to connect actions to events. Another thing we tend to miss is thinking that what did happen was the only thing that could have happened. It’s not.

We work around this through design. For instance, we know innovation is important but without separate metrics and incentives it’s less likely to happen. Put another way, it’s the framing stupid.

Wet bias makes sense. Being less honest than possible also makes sense. Quoting average waits may be more accurate but it’s less valuable.

Design and framing were two of my favorite ideas. For the ideas vitamin-style in a daily email drip, buy the email-drip on Gumroad. Find it on Amazon too.

Being better than Superman

Maxim four from Richard Zeckhauser is: “When trying to understand a complex real-world situation, think of an everyday analogue”.

Alex Tabarrok has been using this strategy to communicate about vaccines.

“To me the vaccines are like a superpower. Superman is immune to bullets and I tell people: ‘Wouldn’t you like to be immune to bullets? The virus has killed many more people this year than bullets have, and the vaccine makes you immune to the virus, it’s better than being immune to bullets!'” – Alex Tabarrok, July 2021

In Dan Levy’s book about Richard Zeckhauser he includes a section from Gary Orren who used the everyday analogy strategy to describe the AmeriCorps service program. AmeriCorps, Orren told legislators, is like a Swiss Army knife, it does many things well though it’s never the perfect tool. A few weeks after addressing the governmental staff Orren returned to their offices. “Oh yeah, I remember you. Swiss Army knife.”

This strategy helped, Orren explained, because it focused his thinking and the audience’s understanding. A lot of times our thinking is FAST and analogies shift complex concepts into simpler situations.

Simplification isn’t the end though. Extremes, like questioning the Ohio vaccine lotto, are not the final answers but a first foothold. If we can understand an issue’s basic components first, it can be easier to build up to the rubber-meets-the-road challenges of IRL.

My year of AmeriCorps was health based, and I remember many vision screenings .