Sunday, August 23, 2015

Every car in the junk yard is there because of one thing.

Recently my 1999 minivan needed $2400 worth of repairs. The book value of this car is about $1400. Fix it or sell it? What makes the most sense financially and ecologically?

Cars in the US are getting older: According to IHS, the average age for all US light vehicle in 2015 was 11.5 years [1]. Cars are lasting longer, and this is a great thing if you own a car. This seems to have several causes: vehicles are being made better, the 2008 recession hit a lot of folks financially, and the average American is getting poorer [2].

For sale: 1999 Toyota Sienna Van. Needs work. $1400 OBO?

The ABS unit on my van needed replacement. When I brought it to the shop, the mechanic said he couldn't fix it - I should take it to the dealer. The dealer was happy to charge me $2400 - almost double the net worth of the car. I said "No thanks" and drove home. I'd  bought the car new in 1999, and it still mostly runs. My kids had grown up in this car, shuttled around between activities, and finally learning to drive it.

There's always a "final straw" that makes a car not worth fixing. Maybe that's a wreck, or maybe an ABS brake unit, or maybe even a worn out tire.

"Every car in the junk yard is there because of one thing." - Car talk
Average age of US cars and light trucks. Note y-axis scale starts at “9 years” to show slight differences by year. Data: Polk.
The downside of older cars?

Pollution. Older cars pollute more for several different reasons. One Canadian study indicates that 25 percent of cars cause 90 percent of pollution [3]. This is due to poorly tuned engines - more common in older vehicles. In California there is an effort to improve air quality by scrapping the oldest cars on the road.  This program buys and scraps cars built in 1984 and earlier that have poor emission controls.[4]

Not that simple: How much pollution does building a new car cause? It's a complicated question. You have to include mining, transportation, materials costs, and a lot of other factors. Pollution comes in many forms - destruction of land, toxic chemicals, and CO2 emissions. Of these, CO2 is the easiest to quantify, so we'll look at CO2 pollution.

Manufacturing a medium sized car emits around 17 metric tons of CO2 [5]. Given that the average car produces 4.7 metric tons [6] of CO2 per year, manufacturing a car is worth 3 1/2 years of CO2 emissions. Of course that's an "average" car - old clunkers probably emit a lot more! This picture is further blurred when you look at the social benefits of auto manufacturing (jobs) and the non CO2 pollution created. Still, getting rid of the worst clunkers is a good idea.

Scrap of fix?

I took the old van to another mechanic (Meltons in Durham) and they gave me an estimate of $700 to fix it. The guy there said it's still a good car, and worth fixing. What was the environmental side of this choice? If I sold it, it would probably stay on the road for another few years. Since the engine is in good shape, it's probably not one of the worst polluters. Anyways, I only drive it a couple of thousand miles a year., and insurance costs are low.

Decision: Fix it.

[1] Average Age of Light Vehicles in the U.S. Rises Slightly in 2015 to 11.5 years
[2] The Average American Family Is Poorer 
[3] Study suggests 25% of cars cause 90% of pollution
[4] Old Car Buyback
[5] What's the carbon footprint of ... a new car? 
[6] Tons of CO2 per year

Thursday, October 17, 2013

What are those Strange Symbols?

European Conformity. The manufacturer meets European Union standards, so the product can be sold anywhere within the EU. These standards cover issues like safety, power usage, or noise.

Copyright. You see this symbol everywhere, but it has no magical powers.  In the U.S. the act of producing a creative work automatically gives it copyright protection, so the symbol isn't required.
Registered Trademark. Indicates a brand or service registered with the trademark office.  Registering isn't required to establish a trademark, but if you don’t register you can only use the TM symbol. Un-registered service brands must use the SM symbol.

Sound copyright symbol. Not sure how they put this on a sound recording. Perhaps it sounds like the "gong" sound from "Law and Order".

Estimated Sign. Used for pre-packaged goods in Europe to indicate that they use measurement standards. The standard specifies the acceptable margin of error – both too much and too little.

Looks like a happy "e" to me.

Creative Commons Logo. Indicates that a work is not copyrighted, and can be used freely. It’s a visual pun on the copyright symbol.

Kosher certification. These are stamps of various different regional organizations that certify that a product meets kosher (Jewish) food standards.

Seems to me that the rabbi's should be able to get together and agree on a common logo.

Halal. Designates that a food meets Islamic food standards. As with kosher, the concept seems simple enough, but the internet is full of stupid and paranoid people. Various groups interpret them as a terrorist funding conspiracy, a war on Christmas, or an anti-western jihad.

Plastic recycling codes. These codes are used to sort different types of plastic for recycling. Most of us just chuck the plastics into the recycling bin, but this is a huge pain for plastics recyclers. Some plastics like PETE soda bottles are easy to recycle, while other plastics aren't. These other plastics can only be economically recycled from pure commercial sources.

Irradiated food. This symbol is the “Radura”, which indicates that the food was sterilized with radiation. Radiation makes people nervous, so irradiated foods have a tough time being accepted. It offers some big advantages – killing germs without adding chemicals. Assuming, of course, that it is not actually radioactive.

Underwriters Laboratory. UL is a non-profit organization tests products in the United States to certify that they meet safety standards. The organization was founded in 1894 by fire insurance companies to test products.

Underwriters Laboratory lite certification. Indicates that UL "recognizes" the product, whatever that means.

This has got to be the ugliest symbol of them all.
Canadian Standards Association. The CSA is similar to Underwriters Laboratories, but with a Canadian accent.

China Compulsory Commission. Certified by a Chinese agency to meet standards for sale in China. How tough can that be?

FCC Certification. The product meets US Federal Communications Commission standards for electromagnetic radiation.

Vegetarian. The manufacturer claims that the product is suitable for vegetarians.
Be careful not to confuse the vegetarian symbol with the Vegan symbol.

Monday, October 07, 2013

Road Art

Is it fall, or have the Canadians been here?

Sunday, September 29, 2013

When this was somewhere

About a mile from my house, an unimpressive two lane road heads south out of Apex through the unincorporated communities Friendship, New Hill, and Bonsal. There is nothing inspiring about this road. It passes small brick ranch houses, unprosperous country stores, and a few long shuttered and decaying businesses. This is “Old US 1”, a route that shadows the new four lane Claude E. Pope Memorial highway (US Route 1), and the CSX Railway tracks heading south.

At the intersection of Old US 1 and New Hill Hollerman Road you may notice an abandoned restaurant with some small structures in the back. This is the former site of “Troy’s Camping Cabins”. This isn’t a very impressive structure, but it represents a mildly interesting part of local history.
Troy's Camping Cabins in 2013
From the 1920’s until the 1960’s Route 1 was the main road between New York and Miami. Babe Ruth, Bonny & Clyde, and the Great Gatsby sped down this road in a hurry to get somewhere else. They drove through tobacco fields and small towns on their way from the Big Apple to a winter vacation in Miami. It was an exhausting drive that took days. Back then cars and roads were unreliable, with frequent breakdowns and stretches of muddy dirt and washboard gravel.

Each small town along the way tried to capture a few dollars as the travelers sped through. Roadside diners, gas stations with Coca-Cola machines, and motels provided basic services, and mechanics fixed flat tires and overheating radiators. An enterprising constable and justice of the peace could finance the town budget with bonanza of speeding tickets and traffic fines – payable immediately in cash.
Apex Highlights
Route 1 got its start when the original 13 colonies started stringing together footpaths and trails into a system of standard routes between cities. It became a wagon road, carrying freight wagons, Conestoga’s, and stage coaches. In 1802 a busy traveler could average fifty three miles a day along the route. Many of these cities were located at the fall line; the place where boats could no longer navigate upriver from the ocean. This included Trenton, Philadelphia, Richmond, Raleigh, and Augusta – all cities along Route 1.

The railroads quickly took over as the main route for commerce, following the same path. Trains dominated transportation until automobiles made their appearance in force around 1910. By 1915, the route was designated the “Atlantic Highway, and stretched from Canada to Southern Florida. By 1922 it was called U.S. Route 1.

In North Carolina Route 1 takes a path through Raleigh, and then downtown Apex, and on to Sanford - pretty much following the railroad. My hometown of Apex was an unremarkable farming town with brick buildings lining the unpaved main street. Just southwest of town, travelers could stay the night at Troy’s Camping Cabins at New Hill. Troy’s was an old-style car motor hotel with separate cabins.

The motorcar
The first cars were a novelty. Long distance travelers would have to stop and sleep where they could find a place. If no inn was available, they could pull over into a farm field and set-up tents of sleep in the car.
“The autocamper and his family may go where they choose, may stop where and when they like, may ask odds of no man because they are in the wide domain of the Roadside,” - Autocamping, by F. E. Brimmer, 1923
Good stopover sites developed into campgrounds, and then local farmers built cabins and restrooms for motorists. These accommodations had varying standards of quality and cleanliness. Troy’s was one of these old style campgrounds – it looks well maintained on the postcard.
Troy's in its heyday - 1950's?
Eventually travelers got tired of roughing it, and opted for single building motels. Later, in the 1960’s as the interstate highway system was built, big chain motels like Howard Johnsons and Quality Courts took over the business, leaving places like Troy’s literally in the dust.
In addition to cabins, Troy’s featured a restaurant. Babe Ruth stopped here and was cooked a special chicken dinner. Local legend says Bonnie & Clyde also paid a visit between bank robberies. By the 1970’s Interstate 95 had put Troy’s out of business.

The cabins are still there – nicely painted and boarded up. The restaurant is closed. Business is a bit slow in New Hill.

Sunday, March 31, 2013

The inevitability of the unlikely

Do you remember anything from that statistics class you took years ago? If you do, it's probably the "bell curve", aka the "normal distribution". That's a good thing to remember, because the bell curve is a really useful tool for understanding some aspects in the real world. If you were really paying attention, you remember all that stuff about mean and standard deviation, and maybe even skew and central limit theorem.

Attack of the 50 ft woman!

Like me, I'm sure you're concerned about the possibility of a gigantic swimsuit clad supermodel rampaging through our cities. After all, it's happened twice in the movies, once in 1953, and again in 1993. Just how likely is this scenario? Let's look at the height of women, over the age of 20. The statistics are based on the U.S. National Health Statistics Report - October 22, 2008.

As you can see the average height of adult females is around 64 inches, or about 5'4". The laws of statistics tell us that 99.7 percent of women will be between 4'3" and 6'4". Well, what do you suppose the odds are of a woman being 20 feet tall? See if you can find it on the graph - that's about 243 inches. (50 ft didn't fit)

That's right - the chances are infinitesimally small (around 1.0E-399). So, what are the chances of being attacked by a 50 foot woman - zero actually. There are real biological reasons that a human can't grow to be 50 feet tall. She would collapse and suffocate under her own weight. Maybe the 50 foot woman could live in the ocean, eating krill and sticking her nose out of the water to breathe. Water might support her colossal mass like it does for whales, but she could not survive on land. In any case, she wouldn't be much of a menace. 

Like many natural systems systems constrained by biological and physical limits, human height matches the bell curve pretty well

Why Volkswagen was the world's most valuable company: for a few minutes.

Some things don't fit well under a bell curve. There are lots of examples, including executive compensation, attendance of rock concerts, and lottery payouts. What these examples have in common is that a few rare events have an unprecedented impact.

A good example is the stock price of the German auto company Volkswagen. In early 2008, the company stock was trading for around €120 a share. The executives at rival German auto maker Porsche, decided to  take control of Volkswagen. They started by buying all the VW stock they could get their hands on. They also bought stock options to guarantee a reasonable price for shares once the news of the takeover became public. Porsche acquired 43% of all VW stock, and had options for another 32% - controlling a total of 75%. Another 20% was not for sale - leaving only 5% of VW shares on the market.

Stock options are complicated, but allow me to simplify the problem: Options are a type of contract promising to sell stocks in the future, for an agreed price. The seller doesn't have to own any shares when they sell the option - it's just a promise. Some of these sellers are betting that they can buy the stocks in the future more cheaply than they can now. They can make a lot of money if prices go down - or lose a lot if they go up.

Here's how it all went crazy: Porsche called up the people who owed them options, and said  "Gib mir meine Bestände!" ("Give me my stocks, now!" )
 The option sellers had to rush out and buy 32% of all VW stock - oops! Only 5% of the stock was for sale. This is called a "short squeeze".

Price history of Volkswagen shares (VOW). Hint: This is not a bell curve.
The buyers were desperate; sellers raised prices - the price shot up to over €1000 a share for a few minutes. Guess who had the most stock to sell? Why Porsche, of course. Porsche sold €1000 shares to the option sellers, so the option sellers could sell it back to them for €120 a share. Not a bad deal for Porsche Automobil Holding SE. (Ironically, some options traders had to sell their Porsche and buy a Volkswagen.)

Life in Mediocristan and Extremistan

The height of women, and the price of VW stock are examples of what economist Nassim Nicholas Taleb  humorously refers to as Mediocristan and Extremistan. These two fictional countries represent the predictable world of things like height, and the insanely unpredictable world of stock prices.

Map of the "Stans"

In Mediocrastan, everything fits under a bell curve. In Mediocrastan rare events are rare - and when they do occur, they can be explained. Yao Defen of China is seven-feet-eight-inches tall. Despite being the tallest woman in the world she belongs in Mediocristan. She she is a mere 90 inches on our graph above (+5 sigma).

Residents of Extremistan include Bill Gates and the price of VW stock on October 23, 2008, and most lottery grand prize winners. Bill Gates is has a net worth of $63 Billion, as compared to the mean U.S. net worth of $556,300*. If Bill Gates's height were proportional to his wealth, he would stand at a height of about 100 miles.

"In Extremistan, rare events are common"

How can this be? Any single rare event is, by definition, rare. But when you take all the possible rare events that can occur, chances of one of them occurring are high. For example, the odds of being struck by lightning are 1 in 280,000. The odds of being killed in an air-crash are 1 in 335,000. Both are pretty long odds. But, when you also add in the possibility of being eaten by a shark, hit by a meteor, bit by a black mamba, eaten by piranhas, run over by a bulldozer, and a thousand other rare events, the odds start adding up.

You probably knew someone who was killed by a rare event - maybe several. The odds of that event were tiny, but given all the possible rare events, and all the people you have known, the chances are pretty high.

Useful information:
  • Rare events are common, you just never know which event!
  • Options trading is riskier than you may think
  • The bell curve does not apply to everything
  • Bill Gates is 100 miles tall, financially speaking
Congratulations you're one of those rare people who can read a whole blog post about statistics. Many of the ideas in this post are misrepresentations of The Black Swan: The Impact of the Highly Improbable, by Nassim Nicholas Taleb

*$556,300 is the average U.S. net worth, including Bill Gates and Warren Buffet. Median is $120,300.

The Internet has Ruined Jokes

Years ago people told each other jokes. In my family, it would work something like this: my uncle in New York would hear a joke - he’ll call my dad and tell him - my dad would tell my mom, and I would overhear it - I would tell it to my friends. Everybody got to hear a joke, everybody got to tell a joke. It was a win-win all around.

Today most jokes are delivered wholesale by the electronic media, and they aren’t as funny. Maybe you see them on, or somebody spams you with the joke, or maybe you heard Garrison Keillor tell it on NPR. Most computer transmitted jokes aren’t even told – they're just forwarded, or re-posted on Facebook.

It’s time to revive the art of telling jokes. If we’re going to make this work, we need some guidelines.

  1.     Jokes may not be emailed or posted on social media.
  2.     Jokes must be told in person or live over voice media.*
  3.     One (1) point will be awarded for telling a joke.
  4.     Two (2) points are awarded for telling a funny† joke.
  5.     Three (3) points are awarded for making up and telling an original‡ joke.
  6.     Five (5) points are awarded for making up and telling a funny original joke.
  7.     A pun, however funny, may be awarded no more than two (2) points.
  1.     Forgetting the punch line – loss of one (1) point
  2.     Repeating the punch line – loss of one (1) point for each subsequent repetition.
  3.     Repeating any joke told by Jeff Foxworthy– loss of one (1) point.
  4.     Telling a dirty joke that isn’t funny – loss of three (3) points.
Please join me in the revival of this once great American tradition.

*Telephone, VOIP, or two-way radio. SMS and live chat are excluded. (Rule under review 3/30/2013)
†The joke will be considered funny if the audience exhibits genuine mirth.
‡Wholly original content or substantially modified punch-line.

Tuesday, March 19, 2013

The Dunning Kruger Effect, or why you shouldn't listen to bloggers

This should make you paranoid - but don’t worry, if it does, you’re fine. If it doesn't make you paranoid, it should. Confused? That’s a good thing!

In 1999 two Cornell University psychologists named David Dunning and Justin Kruger conducted 
a simple study comparing what students thought they knew, and what they actually knew. The results provide some deep insights into human behavior, and a cautionary tale to those willing to engage in some self-criticism.
The Study
Students were tested on humor, logic, and grammar. They were given an exam, and then asked to evaluate their own performance. Actual test scores were compared with the self-evaluation. Logic and grammar are easy to test objectively, but you may wonder about testing a subjective subject like humor. The study came up with a pretty good metric; the student’s answers were compared with a panel of experts - professional comedians.

 The worse a person was at the test; the more they overestimated their abilities. The absolute worst performers rated themselves nearly on par with the best performers. The worst performers also rated themselves above all but the very top performers.

It Gets Worse!
In a follow up study students were asked to grade the work of their peers on the test. Not surprisingly, the worse they scored, the worse were at judging the skills of others. In other words, they didn’t have the expertise to recognize real expertise in others.

Dunning and Kruger provide some insightful analysis of the results. Read the paper 
HERE. You probably don’t have the time to read it yourself, so here’s what I got out of it:
Four Key Points
1. Incompetent people think they are competent
2. Very competent people doubt their own abilities.
3. Incompetent people can’t recognize competence in others.
4. You have been, and will be, one of those people sometimes.
"Does this remind you someone you know?"

Actually, most people immediately recognize the Dunning Kruger effect from abundant incidents in their own life: a terrible boss, a pedantic teacher, an ignorant coworker who thinks he knows everything. We’ve all seen it in small children – they read a book on dinosaurs and proudly announce that they know everything about dinosaurs. Of course it’s OK in kids because we know their experience is so limited. If kids knew how much they had to learn, they would never try anything new. It’s a great coping mechanism for someone just starting out. A friend of mine once said “Kids are a lot like people”. When we see the same thing in adults, it is no longer cute.
"Could it apply to me?" 

Paradoxically, most of us never see ourselves as the incompetent one.  Of course, you and I have never fallen prey to the Dunning Kruger effect.

A few years ago, I was brought into a new project. I immediately looked around and saw that “everyone was doing it wrong!”  Everyone was making a big fuss about what was really very simple. Not so many years ago, I would have confidently explained to everyone within earshot how to fix everything.  Luckily, I kept my mouth shut. After a few months, I started to see the complexity of the project. Four years later I’m getting a sense of all the things I don’t know. Think how much I won’t know after ten years! It makes me appreciate the patient people who took the time to wean me from my ignorance.
"That explains why incompetents rate themselves too high. Why do competent people rate themselves too low?"

The explanation given by Dunning and Kruger is the “
False Consensus Effect”.  People tend to overestimate how much other people agree with them. They know enough to recognize the limits of their own knowledge. Competent people assume that everyone else is competent like them, making them average. The good news here is that when good performers are asked to rate the work of others; they often recognize this incorrect assumption.
How to Use This Information

This study is packed with insights. Here are some of the actionable ones:
  • The first, and obvious thing is don’t believe people’s self-assessment of their abilities. If they are incompetent, they don’t know it. If they are well above average, they may not know that either.
  • Recognize that the effect applies to you. Be humble. Test your assumptions before make a fool of yourself. 
  • Recognize that incompetent people don’t know they are incompetent. Just showing them the facts won’t convince them, because they won’t recognize the facts. You’re going to have to educate them before they can understand. 
Beware of Bloggers

Some bloggers are legitimate experts, but most aren’t. Sometimes that’s OK. Bloggers are usually more like journalists than experts. Journalists fill the role of publicizing and popularizing the work of others. This is important work, but it shouldn’t be mistaken for genuine expertise.

For complex and difficult issues, journalists (and especially bloggers) often get the facts wrong. Most real journalists are held by their editors and publishers to minimum standards.  Unfortunately, editors aren’t experts, and publishers are usually more concerned about issues like profitability. Bloggers don't have any standards at all.

If you’ve read this far, ask yourself about the author of this article. I’m not a PhD in psychology and I’ve never done any original research in the field. I can only hope that my esteemed readers will take me to task if I get the facts wrong.

© 2008 Raoul Rubin