Woody Tasch of Slow Money on VPR

In case you missed this, here is the head of Slow Money on VT Edition a few weeks ago.
http://www.vpr.net/episode/46653/

Slow Money Gathering

http://www.slowmoneyalliance.org/national-gathering.html

September 9-11 in Santa Fe. Wish this was closer to Vermont! Anyone going?

Commencement Address by Paul Hawken

Bill Ryerson of Population Media Center sent this out via his email listserv. I wanted to share as well. Get inspired and be proud and humbled by the work that you do and are getting prepared to do.

Paul Hawken’s Commencement Address to the Class of 2009 University of Portland, May 3rd, 2009. Paul Hawken is a renowned entrepreneur, visionary environmental activist, and author of many books, most recently Blessed Unrest: How the Largest Movement in the World Came into Being and Why No One Saw It Coming. He was presented with an honorary doctorate of humane letters by University president Father Bill Beauchamp, C.S.C., when he delivered this speech. See: http://www.up.edu/commencement/default.aspx?cid=9456&pid=3144

Excerpts:

“When I was invited to give this speech, I was asked if I could give a simple short talk that was ‘direct, naked, taut, honest, passionate, lean, shivering, startling, and graceful.’ No pressure there.”

“When asked if I am pessimistic or optimistic about the future, my answer is always the same: If you look at the science about what is happening on earth and aren’t pessimistic, you don’t understand the data. But if you meet the people who are working to restore this earth and the lives of the poor, and you aren’t optimistic, you haven’t got a pulse. What I see everywhere in the world are ordinary people willing to confront despair, power, and incalculable odds in order to restore some semblance of grace, justice, and beauty to this world. The poet Adrienne Rich wrote, ‘So much has been destroyed I have cast my lot with those who, age after age, perversely, with no extraordinary power, reconstitute the world.’ There could be no better description. Humanity is coalescing. It is reconstituting the world, and the action is taking place in schoolrooms, farms, jungles, villages, campuses, companies, refuge camps, deserts, fisheries, and slums.”

And it continues and is worth the read.

Anna

CDAE Chair Jane Kolodinsky weighs in on bartering

http://www.vpr.net/news_detail/85168/

Jane Kolodinsky weighs in on the extent of, new developments in, and economic aspects of bartering with VPR’s Jane Lindholm on the June 15th Vermont Edition. Reminded me of the Morrill Money discussions and experiments we had earlier this year.

Refugees impact homelessness

This letter to the editor in today’s Burlington Free Press has been under my skin all day. The author discusses the five families he knows that have become homeless because of various reasons and points the fingers at incoming refugee populations in Burlington. I am crafting a response to the letter based on how during difficult economic times it is easy to point to a group of people as the reason for your own troubles. This behavior leads to marginalization and persecution… some of the same reasons that have tragically made these families refugees in the first place…
Anna

Economics of Sustainability

Listen in on the Economics of Sustainability lecture from March 17th.

Opportunity Costs, Choice Architecture & Careerism

I haven’t read anything in Behavioral Economics about the way we react to opportunity costs and so I’ll posit what I think is a serious influence on the way we make choices.  I was talking with a well-established professor and friend not long ago about careers and he was offering advice by reflecting on his past.  He described his youthful struggle to climb the latter, the positions he took and the friends and lovers he had left behind in the pursuit of his career.

We all make sacrifices for our careers and perhaps what we give up along the way is of no little consequence on how we pursue our goals.  Take the following example:  I long to be a world class chef (anyone who knows me is laughing now) and when Wolfgang Puck tells me that I’ve been accepted to be his intern I have to say goodbye to the woman I’m dating in order to work for Wolfgang.  How does giving up this relationship influence the way I chop broccoli in Wolfgang’s kitchen?

I’ll suggest that as we pursue our careers and give up our other paths, we are fueled perhaps to pursue our goals with more vigor than we otherwise would have.  Spurred by the knowledge of what we gave up we’re motivated to make sure that this choice will be the right one.  Maybe we work harder, or rationalize our choices deeper, we do whatever we can to make sure that our sacrifice was not in vain.  Now, how does that situation compare to one where we gave up nothing – if we pursue our goals without sacrifice are they as sweet and do we chase them with the same tenacity?

The understanding of Opportunity Costs as an influence on Choice Architecture and the wider topics of Behavioral Economics is surely an interesting one.  We all know of times when we’ve given something up to pursue what we thought we wanted, so what do you think?  Did the sacrifice make you work harder, are you happier for reaching your goal, would you do it again?

Jeff

Frederick the Great and Getting away from Mean Economics

I had a quote from Frederick the Great running through my head today.  I don’t remember where I heard it, but the wording is something similar to: “If you seek to defend everything, you defend nothing.” I was looking at some data while this idea was in my head and it became obvious to me that Frederick the Great may just as well have been talking about regression analysis and the use of averages in economic data, as we was about protecting Prussia.

I know it wasn’t Frederick’s meaning but his idea about getting nothing by attempting to do everything caused me to begin questioning just how relevant it is to focus on the mean (average) of variables when considering some economic data.  Malcolm Gladwell was telling a story on TED.com about a psycho-physicist Dr. Howard Moskowitz who came to the stunning conclusion that marketers should not be looking for the most perfect version of their product, but instead the most perfect versions of their product – in other words the optimal variations of that product. Dr. Moskowitz is the reason why we have 30 varieties of spaghetti sauce and whole aisles of salad dressing. It is the conclusion that came out of finding wild data that didn’t adhere to the standard bell-curve and concluding that instead of trying to find the bell-curve average of their product, the key was to create all the varieties of the product that people were indicating they preferred. This is a huge insight into how we, not only prefer our salad dressing, but how we organize as humans.

The essence of Dr. Moskowitz’s idea is that people exist not in the average of their variety but in the variety of their variety – that our proximity to the mean is greater than our proximity to our most common cluster or group. It means that we perhaps it would be more accurate to assess some economic data by not looking for some sacred average human who we work to please with our models, but by looking for the many varying types of people as they associate in groups of all kinds. This seems to me to be a much more accurate interpretation of reality than to always seek the mean, and it suggests something important about how we understand economics.

Currently there is a never-ending disagreements about what one set of data may indicate in economics.  Several economists will consider the same data and come to vastly different conclusions.  My suggestions for thought is that if we can assume Dr. Moskowitz’s findings are an example of not only how we purchase condiments, but of how we associate our preferences, then perhaps the disparity in interpreting some economic data is due more to the fact that people cluster and that we should be looking to identify the nature of groups instead of the nature of the non-existent “average” human.  This may be a completely obvious point for a lot of people, but the idea that economics tends to seek an average identity that may not exist and is less accurate than an assortment of group identities was somewhat striking to me.

- Jeff

Irrationally Obese

I was eating lunch today, an especially fatty one, and came across a quick theory on how the assumption of rational economic behavior is refuted simply by the way we eat. Traditional economic theory assumes that consumers are rationally engaged in balancing the costs and benefits of their actions to produce the highest amount of utility.

Under this logic, becoming obese should have absolutely no regret attached, in fact anyone who has become obese should be marginally happier for each bite they take. The few extra pounds I’ve put on this winter are irrational ones because while I finish off that last piece of pie, I’m discounting the way I’ll feel tomorrow. In traditional econ theory, we are making marginal rational decisions over and over to achieve our physical state and under that definition of utility-seeking behavior, regret should be the last emotion for us to have.

An interesting behavioral economics study would be to see if obesity correlates with one’s natural discount rate. The experiment could go like this: You offer someone 100 dollars today and then you find out how much you would have to pay them tomorrow for them not to take the 100 today and compare the degree of their discount rate with their BMI. Then repeat to find the arch of their discount rate by running the same experiment for paying them the next day, the next week, month and so on. Or perhaps we could just ask people, “In the past week, on how many times have you felt that you ate more than you should have?”

The fact that some people do regret being obese, or slightly overweight, means that consumers do not act rationally and that a disconnect exists between the traditional economic paradigm and reality.

-Jeff

Economics of Sustainability Feb 17

Another podcast from the economics of sustainability!