Wednesday, June 22, 2022

Are algorithms that give us what we want discriminatory?

Ad algorithms "learn" what we want by our behavior, e.g., by maximizing click-through-rates (CTR's).  For example, women are more likely to be shown ads for shampoo and conditioner, while men see ads for products that combine the two :

...Irish Spring offers men one green bottle with the instructions: “Pour it on your head and let gravity do the work.”

Which brings us to the US Justice Department, which charged Meta with "discriminating against Facebook users based on their race, gender, religion and other characteristics." 

To settle the charge, Facebook said it "would work with HUD" to alter its algorithms to achieve less discriminatory outcomes, i.e., to show us ads that we don't want to see, e.g., for example in areas where we may not want to live. 

 We have met the enemy and it is we.

Tuesday, June 21, 2022

Reverse currency wars: exporting inflation

From Axios Macro:

In a currency war, e.g., between the US and EU, the US reduces interest rates, which makes investing in the US less attractive, which means there are fewer foreign investors who want to sell euros to buy dollars to invest in the US.  

[We look at this from the point of view of dollar demand and supply, so when you see the word "buy" think "demand"]. 

This reduction in the demand for dollars reduces the price of a dollar, which makes US exports more attractive to foreign consumers which helps US producers, but hurts foreign producers.  To protect their own producers by making the euro weaker, the EU will reduce rates in response.  

In a reverse currency war, the US raises interest rates to combat inflation, which makes the dollar stronger, which slows the US economy by hurting US producers as it makes US exports more expensive.

However, this also stimulates the EU economy by making EU exports to the US look more attractive to US consumers.  To avoid "importing" US inflation, the EU will raise their own interest rates.   

Tuesday, June 14, 2022 shows us the effects of demand and supply shifts.

Predict it allows traders to buy and sell futures contracts ("bet") on political outcomes.  Because the contracts pay off $1 if the event occurs, prices can be interpreted as probabilities.  If something increases the probability that an event will occur, demand for the contracts will increase which drives up the price.  

  • Here are the current prices of two contracts:
  • You can use the history of price movements to answer questions, like "what was the effect of the June 9, 2022 televised hearings on the Jan 6 Capitol riot?"  
    • In the graph below, on June 11, we see a very slight uptick in the probability of Buttigieg as the Democratic nominee, and slight downticks in the probabilities of Biden or Harris.  This segues nicely into a discussion of how quickly market prices reflect changes.  

    • We do not see a similar change in the probability of house House or Senate control

Friday, June 10, 2022

EVs and VGs are the new Razors and Blades









Sony is partnering with Honda to make a new EV automobile. What does Sony bring?

The car business “is shifting toward EVs, and at the same time they’ll be hooked up to a network, so they’re being turned into a tech product,” Mr. Yoshida said.


Currently, drivers’ ability to enjoy a Sony movie or videogame is limited by the need to keep their eyes on the road, but Mr. Yoshida expressed hope that full autonomous driving would spread in the next few years. 

Without having to watch the road, drivers, or rather riders, can enjoy some Sony entertainment. It looks like Sony will implement the common video gaming pricing model popularized by Gillette a century ago of "giving away the razor, to sell the blade." That is, set a low margin on the "system," in this case the autonomous EV, to charge more for the accessories, in this case, connected games and entertainment. This sort of metering price discrimination means that hardcore rider/gamers who consume more entertainment and receive more surplus will be paying larger margins. More casual rider/gamers who consume less will pay less.

Sunday, June 5, 2022

YIMBY's retake the moral high ground

NIMBY stands for “Not in my backyard,” an acronym that proliferated in the early 1980s to describe neighbors who fight nearby development, especially anything involving apartments. ... NIMBYs who used to be viewed as, at best, defenders of their community, and at worst just practical, are now painted as housing hoarders whose efforts have increased racial segregation, deepened wealth inequality and are robbing the next generation of the American dream.

CEQA [California Environmental Quality Act] was meant to serve noble purposes, but it can be manipulated to be a formidable tool of obstruction, particularly against proposed projects that will increase housing density. A CEQA lawsuit “provide[s] a uniquely powerful legal tool to block, delay, or leverage economic and other agendas,” and “is now the tool of choice for resisting change that would accommodate more people in existing communities.” 
...However, when private opposition is joined with official hostility, CEQA becomes an even more fearsome weapon. When the project proponent faces sustained private opposition, plus the combined animus of two levels of local government, the temptation to throw in the towel must be overwhelming. Something is very wrong with this picture. 

 California’s chronic housing shortage shows no signs of abating with construction scarcely half of the 180,000 new units the state says are needed each year to close the demand/supply deficit. 

There is no single reason, but rather a toxic mĂ©lange of high costs, regulatory overkill and stubborn resistance from local government officials catering to the not-in-my-backyard sentiments of their constituents. [However, ...] pro-housing pressures may be having some effect:

  • SACRAMENTO: Anyone who doubts the negative impact of high costs on housing should take a look at the budget for a 124-unit affordable housing project on the state-owned site of a former National Guard armory. ... The state is donating the land to the non-profit developer, Bridge Housing Corp., without cost and the City of Sacramento is waiving $468,624 in impact fees. But the budget for the project is still $82.4 million, which works out to about $665,000 per unit — enough to buy a very nice house for every projected low-income tenant.
  • CONCORD: What would be the San Francisco Bay Area’s largest ever housing development, 13,000 units on the site of the former Concord Naval Weapons Station, is stalling out.
  • HUNTINGTON BEACH: Orange County ... finally approved a 48-unit condominium project... Years of court battles with pro-housing groups and pressure from new state laws finally forced the city to throw in its beach towel last month.
  • TIBURON: ... the state Court of Appeal last month slapped down Tiburon’s nearly half-century-long efforts to block construction of a few new homes on a hill overlooking the tiny city.  [see decision above]