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Unintended Consequences: bag bans

Potential bias: if bring-your-bag was equivalent to free-throw rate I’d be an all star.

Update: since drafting this post there was a related interview on Data Skeptic with Becca Taylor about this. It was good

Our evolutionary advantage was to see cause and effect. This If this then that approach to life kept us alive. It was a simple rule that worked great in a simple system. Modern life is not so simple, but that doesn’t mean we need complicated rules (see Gall’s Systems Bible).

A modern simple rule with great effect is to ask and then what when faced with an intervention. There’s always cascading effects and asking and then what is a way to look for the larger effects.

Chicago, 2016-2017, offered a chance to see this question in terms of plastic bags at the grocery store. In sequential months, there was a ban on thin plastic bags, no ban or tax, and then a tax on disposable bags.

This legislative two-step occurred because the first bag ban was a debacle. Lawmakers gave the wrong answer to the and then what question. Instead of ‘people will use reusable bags’, it was ‘stores will get around this by using a slightly different bag.’ 

Asking and then what helps us find that when schools ban soda sales households buy more, when communities ban payday lenders pawn shop foot traffic booms, when governments limit cars one day a week the total number of cars rise. 

From, Skipping the Bag: The Intended and Unintended Consequences of Disposable Bag Regulations:

We 􏰂find that plastic bag bans lead retailers to circumvent the regulation by providing free thicker plastic bags which are not covered by the ban. A regulation change that replaced the ban with a tax on all disposable bags generated large decreases in disposable bag use. Our results suggest that plastic bag bans—stricter, but more narrowly defi􏰂ned regulations—􏰁are less effective than market-based incentives on a more comprehensive set of products

There are a cornucopia of incentives to use to change behavior. Sometimes money works well (bag tax). Sometimes social norms work (the authors note that this may be present in their study). The best thing to try might be small bets

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Thaler, Massey, and Losers

Well before he won The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, Richard Thaler wrote The Loser’s Curse. Along with co-author Cade Massey (well before he hosted the Wharton Moneyball podcast), they found that NFL teams tend to trade too many assets to choose higher in the draft.

With the idea that it’s not what you buy, it’s what you pay we’ll revisit the paper. (Here’s a related 2018 work, also a gated 2020 analysis)

Also, Thaler spoke at SSAC20 about the paper in a panel with Bill James.

Thaler and Massey noticed that in-practice, NFL draft picks declined steeply in value. Top picks were worth a lot. Low picks were worth much less. The chart looked like a roller coaster’s first hill.

What they found was what’s known in the league as ‘The Chart’. The rule-of-thumb systems born in Dallas in 1991, and spread through the league. Thaler and Massey wrote that the chart standardized trades and created the norm to ‘gain a round waiting a year.'” It was the way things had always been done and few teams at the time considered why we’ve always done it that way. 

“What our analysis shows is that while this chart is widely used, it has the ‘wrong’ prices.”

The chart suggested that the first pick of the first round in the draft delivered less value than the last pick of the first round.

Thaler and Massey found the ‘right’ prices by comparing draft slot against games started and pro bowls awarded. Lower drafted players scored higher.

Thaler and Massey wondered if there was a ‘star premium’. “Over their first five years, first-round draft picks have more seasons with zero starts than with selections to the Pro Bowl.” Busting was as likely as breaking out.

Thaler and Massey wondered how often one pick was ‘better than the next guy’ at the same position. “Across all rounds, all positions, all years, the chance that a player proves to be better than the next best alternative is only slightly better than a coin-flip.”

In the paper Thaler and Massey lay out a variety of reasons why ‘The Chart’ was so different from the results. Let’s add four more.

Possible explanation 1: Measurement error. Quarterbacks are tremendously important and the stats underrate their impact. On the Wharton Moneyball podcast Massey brings this up and hints at it on Twitter. In the paper Thaler and Massey do boost performance scores by 50% without seeing value returns shift.

However maybe there was a trend they didn’t or couldn’t quite measure. More and more quarterbacks throw for more than 4,000 yards.

Possible explanation 2: Ownership incentives. The NFL—or any sport—isn’t just about winning. Though Massey and Thaler write that people don’t tune in to see their team lose, they don’t address whether people view interesting as different from winning. We think there’s only one honest sport.

If owners see values rise, share revenues, watch mediocre play, and they themselves face little (social) cost, how strong is the incentive to ‘just win baby’?

Possible explanation 3: Luck matters a lot . Michael Mauboussin writes about guidelines for situations that are more dependent on skill and ones more dependent on luck. For situations with more randomness (and luck) people should trust the base rates more and give more weight to environmental rather than personal factors. By thinking they can find a diamond in the rough, teams are operating like drafting players is more skill than luck based.

However, there’s always a chance to develop better talent evaluation, incorporate new technologies, or coach players better. Those are all skills that could improve the 52% ‘better than the next guy’ success rate.

Possible explanation 4: Culture is king. The effect that Thaler and Massey find could be partially driven by bad organizations picking at the top of the draft. Imagine these were not football franchises but restaurant franchises.

The best chefs keep their jobs and the talent pool for the open positions is a mix of unproven leaders, bad situations, or people who have already failed ‘but learned the right lessons’. The ownership of these franchises are people who have already proved they themselves are bad talent evaluators, or else they wouldn’t be looking for a new coach/chef.

What’s great is that while the data is old the ideas from Thaler and Massey are still present. They’ve taken new forms and changed in many ways but good decision making is still something worth thinking about.

 

Thank you for reading and supporting.

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The incentives of salted roads

On NPR’s, The Indicator, listener Tara Harvey asks host Cardiff Garcia why we salt the roads so much. “Research shows oversalting increases the possibility of slipping, costs more for materials and labor, and causes property damage.”

The Indicator is an economics podcast and Garcia offers economic reasons. Salt is cheap and effective. Salted roads reduce accidents by 87%. Salted roads allow people to get to work, “and that is an economic activity that needs to be counted against the cost.”

Everything Harvey asks and everything Garcia says are logical statements. But while numbers convey authority, they aren’t always right.

An alternative theory focuses on incentives. Consumption and payment aren’t connected

Salt is purchased by governments and governments take heat for not being prepared. Their incentive is to salt more, not less. The consumer’s immediate incentive is excess too. Better safe than sorry.

Until however it comes time to pay. Garcia knows this, “It all costs money. Not just the direct use of the salt itself, which has to be found and paid for, but also the environmental and ecological damage that it leaves behind.”

However, consumers never connect consumption with cost. Sure taxes are too high, but does anyone know how much of their taxes go to salting the roads? Ditto for the environmental effects that follow overselling. Consumers pay, but later and indirectly.

This salty situation is similar to the psychology behind too much debt. Act now, pay later. If later is long enough away and opaque (how much does salt cost a taxpayer?) then the cost seems especially low.

Photo by Simon Matzinger from Pexels