Is Sirius XM in a death spiral?

I recently had the experience of being at a diner for an extended period, during which time the satellite radio provider Sirius XM was playing. What struck me was the surprising quantity of advertisements that played in between songs--advertisements for Sirius XM subscription services and various highlighted stations.

The concept of satellite radio is simple: businesses (and to a lesser extent individual customers) pay Sirius to provide ad-free radio. Needless to say, the more advertisements Sirius interjects into its stream, the less valuable the subscription service becomes relative to the free + advertising radio models out there. If Sirius XM is introducing ads hoping to lure new customers, they run the risk of alienating existing customers on the margin.

In the worst-case scenario, this process edges into a 'death spiral', where the loss of existing customers forces Sirius to include more ads to cover the revenue losses.

Jeff Bezos on books

"The most important thing to observe is that books don't just compete against books. Books compete against people reading blogs and news articles and playing video games and watching TV and going to see movies. 

Books are the competitive set for leisure time. It takes many hours to read a book. It’s a big commitment. If you narrow your field of view and only think about books competing against books, you make really bad decisions. What we really have to do, if we want a healthy culture of long-form reading, is to make books more accessible. 

Part of that is making them less expensive. Books, in my view, are too expensive. Thirty dollars for a book is too expensive. If I'm only competing against other $30 books, then you don’t get there. If you realize that you're really competing against Candy Crush and everything else, then you start to say, “Gosh, maybe we should really work on reducing friction on long-form reading." That’s what Kindle has been about from the very beginning."

That's from a very good interview from Business Insider.

Four overused corporatespeak items

1. Taking something "off line"
2. Referring to emails as simply "notes" (why?)
3. "leverage"
4. "reach out" (as in touch?)

Information Nexus

1. Tim Lee on the tension between deregulation and government action to prevent anti-competitive behavior by monopolists

2. GiveWell begins an investigation of the merits of donating to Ebola charities

3. The rise of the lumbersexual

4. Excellent article on sports analytics in basketball. And football here. Where is the ultimate frisbee analytics movement?

5. "... rather than embracing the deregulatory tenets of Smart Growth, regulators in some cities have layered Smart Growth rules on top of their traditional zoning rules, creating a complicated web of regulations." Article

The politics of mean reversion

The Upshot recently had a column discussing the role that occasional voters play in tempering the more partisan policy preferences of reliable voters. While I don't have strong views about the ethics of voting or nonvoting (although clearly its possible to vote well or vote poorly), I have a very hard time seeing the macro benefits of sporadic voting.

A popular idea in US politics is that we're too polarized. That's not really accurate: the electorate isn't more polarized, rather the institutional arrangements that translate votes into policy are badly skewed towards partisanship and gridlock. A key problem is that the basic system of accountability has degraded. Parties have become more ideologically coherent, which enables increasingly rational collecting strategizing. This is especially important in the senate, where any majority lacking 60 votes can be effectively blocked by the minority. The minority wins politically when the majority loses--and the minority has the institutional power to make the majority lose. Not exactly a recipe for dynamic government capacity.

Here's where sporadic voting comes in. To get anything done in this political reality, the mechanisms of government require a party to control 60 senate seats. But sporadic voters--who tend to be more independent--hold majorities accountable. In recent years the dysfunctional gridlock in federal government has led to a vast army of unsatisfied moderate voters ping-ponging back and forth between parties. Neither Democrats or Republicans ever quite assemble a coalition sizeable enough to truly implement their policy vision before being cut down by moderate voters for their ineffectiveness.

Research methods FTW

Much of the recent controversy over that NYC catcalling video was caused by uncertainty about the research methodology of their 'study'. This article articulates the issue nicely:

The Hollaback video also shows why “data” without theory can be so misleading—and how the same data can fit multiple theories. Since all data collection involves some form of data selection (even the biggest dataset has selection going into what gets included, from what source), and since data selection is always a research method, there is always a need for understanding methods.

Read the article here. It's highly recommended.

A cultural stickiness approach to gender inequality

Project Syndicate has an interesting short essay about the economics of gender:

The finding suggests that in plough-using societies, patriarchal values circumscribed female mobility, and allowed men – as a result of their greater economic contribution – to undermine women’s autonomy. Remarkably, these values, shaped many centuries ago, when certain physical attributes might have been important, have survived in modern societies, in which such attributes have become largely irrelevant.

What I've been reading lately

1. Licensing Occupations: Ensuring Quality or Restricting Competition? by Morris Kleiner

2. How Not To Be Wrong: The Power of Mathematical Thinking by Jordan Ellenberg

3. Superintelligence: Paths, Dangers, Strategies by Nick Bostrom

4. The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor by William Easterly

5. How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness by Russ Roberts

6. Waking Up: A Guide to Spirituality Without Religion by Sam Harris

7. Designing Resilience: Preparing for Extreme Events edited by Louise Comfort, Arjen Boin, and Chris Demchak

8. Political Ideologies and Political Parties in America by Hans Noel

9. Political Order and Political Decay by Francis Fukuyama

10. Mismatch: How Affirmative Action Hurts Students It's Intended to Help, and Why Universities Won't Admit It by Richard Sander and Stuart Taylor

Cognitive style and public policy outcomes

Critics, including Green, like to satirize Obama's cool by comparing him to Spock. But Spock, though often played for laughs, was a damn fine officer. His clear thinking not only saved the Enterprise on countless occasions but was instrumental in brokering a historic peace accord between the Federation and the Klingon Empire.

That is Matt Yglesias, defending Obama's cognitive style from the critics. Establishing a connection between policy outcomes and cognitive profile among presidents is very difficult. Unlike most lawmakers, presidents don't produce a neat, large dataset of votes that lends itself to causal analysis. What's more, factors like cultural and technological change produce qualitative differences in the political context that every president operates in. Isolating the causal effect of cognitive traits on policy outcomes might very well be impossible. But regardless, the post has some excellent points about media incentives and racial bias as well.

Big companies can do big things

Slate has an interesting article about how Walmart is the by far the biggest player in the commercial rooftop solar market:

Big, mature companies often struggle to innovate and adapt to changing consumer demands, but Walmart's experience with solar and organic foods (and Home Depot's with sustainably-harvested lumber) show that big companies can also have a big impact, simply by virtue of their size. While it's entirely possible that Walmart is coming out ahead financially from these investments, the less-tangible benefits in the form of positive buzz and brand equity are surely a big driver of the push.

Additionally, Walmart is implicitly hedging against future policy action by governments, both national and regional, to combat climate change. Companies that proactively set themselves up to respond quickly to a carbon tax or cap-and-trade system (by investing in clean energy and acquiring talent) will very likely see themselves with an enviable competitive advantage.

Research questions about skateboarding

1. Skateboarders appear to be disproportionately comprised of young, thin men. Is this perception shared by the general population?


2. To what degree does this perception reflect the true demographic and physical characteristics of skateboarders?


3. To what degree is the thinness of skateboarders accounted for by their relative youth (i.e. kids tend to be skinnier than adults)?


4. To what degree is the thinness of skateboarders accounted for by other factors, such as exercise, diet, income, and race?


5. Is there a social selection effect occurring that accounts for the thinness of skateboarders? In other words, do non-thin skateboarders have more trouble acquiring status and social benefits in the micro-culture, and stop skateboarding disproportionately?

Information Nexus

1. Ryan Avent on the digital economy's self-limiting productivity growth problem. Very good.
2. The sub-two hour marathon
3. Some interesting observations on living in relative poverty
4. CEO of Copenhagenize discusses urban cycling
5. Does a boring ballot question hold the key to sustaining Minneapolis' restaurant boom? Yes.

Climate change adaptation

Old Dominion University in Norfolk, Virginia has opened the country's first academic institution focusing on climate change adaptation. The hope is that by locating in a city that's very exposed to climate change risks, the institute will have opportunities to work with government and economic stakeholders free of political strife.

A core mantra of climate change adaptation is competition between places: if certain regions or cities are struggling with costs associated with climate change, labor and capital will naturally flow away to find safer harbor (so to speak). Norfolk is betting that investing now in resilience strategies will pay off in the future by reducing the costs of adaptation. Preemptively measuring the effectiveness of various interventions may be possible by comparing things like insurance premiums along coastal cities, although the massive Navy base (and the implicit government guarantee it represents) could pose a methodological problem.

Quote of the week

"One of Smith's insights about technology and gadgets is that we often care more about the elegance of the device than for what it can achieve. He gives the example of a watch that loses two minutes a day, likely a common occurrence in the eighteenth century. Smith says the owner of such a watch might get rid of it and pay a premium for a watch that is dramatically more accurate. But, Smith complains, the owner of the better watch may not be any more punctual than he was with the timepiece that performed more poorly. He bought the better watch simply because it is a superior gadget, not to make his life any better:

But the person so nice with regard to this machine, will not always be found either more scrupulously punctual than other men, or more anxiously concerned upon any other account, to know precisely what time of day it is. What interests him is not so much the attainment of this piece of knowledge, as the perfection of the machine which serves to attain it.

"Then Smith really opens fire on the gadget lovers:

How many people ruin themselves by laying out money on trinkets of frivolous utility? What pleases these lovers of toys is not so much the utility, as the aptness of the machines which are fitted to promote it. All their pockets are stuffed with little conveniencies. They contrive new pockets, unknown in the clothes of other people, in order to carry a greater number.' " 

-------------

That's from Russ Roberts' newest book, How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness. Check out a nice interview about the book here.

 

Book Review: Building a World Class Transportation System by Charles Marohn

Charles Marohn of Strong Towns recently released a short e-book laying out his analysis of the problem with our transportation system, and his plan to fix it. The core insights of Strong Towns derive from a brilliant realization: that by merging our analysis of planning, design and transportation engineering with public finance and economics we can discover surprising truths about what produces growth and prosperity on a fine-grained scale.

 He begins by contrasting the current wave of transportation infrastructure building with previous waves, specifically the construction of the railroad and interstate networks. In contrast to today, previous systems were essentially 'low-hanging fruit': relatively small investments reaped huge gains in productivity. The returns on subsequent building was much lower: connecting two high-performing places creates more wealth and opportunity than connecting two medium- or low-performing places.

 Two subtler points emerge from this story. One is an institutional ratchet effect. During the 'high-return' days, certain institutional norms and arrangements formed and became locked-in, even as the landscape of infrastructure in the US changed dramatically. This idea of 'drift' (or political decay in words of Francis Fukuyama), where policy institutions don't keep pace with changing realities, is rampant here.

 The second point is more philosophical: by maintaining the institutional inertia of infrastructure building even as the ROI of these investments tanked, information-processing and planning-fallacy concerns became more potent. Without the feedback mechanism of prices to coordinate the effective use of scarce resources, infrastructure decisions are largely based on the priorities of the political system. As the low-hanging fruit was picked and finding high-value investments became more difficult, the political system's inherent informational limitations became more apparent (and more costly).

 A large chunk of the book is devoted to articulating the core Strong Towns concepts and laying out a specific reform proposal. I don’t have much to add on this, only to say that his forceful argument against using excess tax revenue from financially-productive places (i.e. those that generate more tax revenue than they consume in public services) to build stuff in non-financially-productive places isn't a blanket argument against all geographic redistribution. His case is limited to the narrow domain of transportation spending, and even then his claim is actually optimistic. Marohn is saying that even a poor place with low growth can be 'financially productive' in an infrastructure sense, so long as it fully appreciates the full tax revenue and maintenance implications of public investments. This is where his framework’s conclusions intersect with localist and resilience-oriented movements.

 The non-partisan, crossover appeal of Strong Towns is a big reason for its success: it uses economics-style analysis (traditionally associated with conservatives) to arrive at conclusions traditionally associated with liberal urbanists. This leads to novel and intellectually satisfying arguments on many topics. A good example is the suburbs: liberals have long disparaged this pattern of development, but often in scattershot, wishy-washy, and vaguely elitist ways. Strong Towns gives us at least one good reason why the suburbs are terrible: the ratio of private investment to public investment is such that these regions are a net drain on the public purse.

 In general the book is good, although its target audience suffers from a 'missing middle' problem. For someone who's unfamiliar with Strong Towns, this is a solid introduction that encompases most of the approach’s flavor. At the other end of the spectrum, this book will be valuable to readers with a technical or professional interest in learning about the finer details of a Strong Towns vision of policy. For amateurs already well-versed in the framework, but lacking a reason to deep-dive into the particular magnitudes of financing ratios, this book is somewhat lacking.

 Marohn concludes by gaming out the winners and losers of his public finance reform proposal. It's an interesting attempt at political analysis, but it seems half-baked: some of his claims are overly optimistic, and the actual coalitional breakdown of any major reform in transportation will likely be as familiar and intractable as always. At times the book slips into the, "nation of whiners" and "people are stupid" rhetoric (common among certain subversive urbanists), which is obnoxious, although perhaps understandable given the epidemic amount of wrongness that exists in this field.