Random thoughts of an economist

不要關心贏輸

Posted in Life by kafuwong on August 26, 2016

一位朋友分享網上奧運的感言。

里約奧運會落幕了!

中國女排打了8場,贏了5場,輸了3場,冠軍!

塞爾維亞打了8場,贏了6場,輸了2場,亞軍!

美國女排打了8場,贏了7場,輸了1場,季軍!

總結:
人生呀,關鍵不在於你贏過多少次,而在於你在什麼時候,什麼場次贏了什麼對手!

這跟人生一樣,年輕時允許失敗,可以積累經驗教訓。越往後就越失敗不起了,因為後面都是淘汰賽,一旦失敗只有出局!

平時的小敗不要緊,祝各位都能在關鍵鍵时刻贏出!

閱後有點感概。看上去,文章的前設是人生的目的是要贏。如果人生是為了要贏,那就要懂得在關鍵時贏。平日的輸是培養日後贏的養分。那平日能從輸中學習就十分重要了。

哈哈哈。說到尾都是為了贏。能不能不談贏輸,只純粹為了享受打球的樂趣,把贏輸看成是副產品呢?我懂的。女排球員心底是想贏的。但人生的比賽是比甚麼?要贏甚麼?由女排的輸贏推到人生的輸贏,強調輸贏,我感到不安。

一樣米養百樣人。有人沒目標。有人的目標是見步步行步。有人有清晰目標。有人就是天天要贏。父母,老師都教下一代要訂好目標,要上進,要賺錢,要贏。追求贏的文化,在香港這類的大城市一點都不缺乏。走進縣城(如我近期探訪的福建永春縣),人是慢活的。你問縣城的人,“你追求什麼”,“你有想贏什麼”。大部份可能就是見步行步,沒有目標的一類。很希望賺錢,很要贏的朋友,都已經去了城市裡找機會。城市裡就是堆滿了為賺錢天天拼搏的人。對於香港人追求贏的文化,我當然是理解的。

然而,我真心的希望球員能為享受打球的樂趣而打球,學生能為享受學習得樂趣而學習。至於收入多少和贏輸勝負,就算是享受之外的副產品吧。

My dear books, good bye.

Posted in Economics, Life, Uncategorized by kafuwong on July 21, 2016

As I prepared my departure from HKU, I started to sort out things that I wanted to take home, and what to discard.

As I did not have to pay for the usage of my office space, I had kept a lot things that I had rarely touched.

Now, leaving HKU means that the usage of space at home to keep these stuff will become costly.  Like most people living in Hong Kong, I cannot afford to keep everything I have accumulated during my 14 years at HKU.  

I asked myself repeatedly, “Is there anything I cannot live without?”  “Is there anything I will likely use in the near future?”   Most of the stuff in my office do not pass these tests.

Mostly books, I decided to give away.  There are a lot of books that have sat on my shelf for a long long time and had rarely been referred to.  Time to say good bye to them.

Now, in retrospect, I should give them out long long time ago.

A long break, I need.

Posted in Life by kafuwong on July 13, 2016

No.  I have not reached the age when my employer would push me out of the door.

Yes.  I still have value to my employer.  He still wants to keep me.

It is my choice to take a break — a long break, possibly.  There does not seem to be a mechanism for me to take a long break  — say a year or two — from my job and return afterwards.  Allowing anyone in my institution to take such a long break might cause difficulty for my employer to hire a short-term replacement.  With such anticipation, my natural choice is to resign.

In my case, I would not call it a resignation.  The good old contract arrived my desk a while back and I simply had decided not to sign.

A thought on how to evaluate whether education expansion helps improve mobility.

Posted in Econometrics, Economics, Hong Kong, Statistics/Econometrics, teaching by kafuwong on September 11, 2015

We often see reports comparing the median income of university graduates over time. The sad news is that the median income of university graduates are often found declining over time. One common conclusion is that the expansion of university education has not helped improve social mobility. And, university graduates seem to be doing worse than before.

While median income is easier to compute, I do not think it is the right measure to address the question of social mobility, or how university graduates nowadays fare when compared to the previous cohorts. A correct measure is some form of median income with an control of the expansion of university education.

Imagine the following hypothetical situations. Suppose that we have a stable population structure. Suppose 20 percent of high school graduates can attend university ten years ago. Imagine we end up with 20 persons achieving high school level and 5 persons achieving university level. The median income of high school graduates was X1 and that of university graduates is Y1. Y1 is usually higher than X1, reflecting the difference in ability of the two groups and added value of education.

For the sake of illustration below, let’s assume that the 5 university graduates have incomes of 12100, 12200, 12300, 12400, 12500. Obviously the median income is 12300. That is, Y1=12300. Let’s further assume that the top 5 earners of high school graduates earn 8100, 8200, 8300, 8400, and 8500 respectively.

Today, due to the expansion of higher education, 40 percent of high school graduates can attend university. Following from the example above, we end up with 15 persons achieving high school level and 10 persons achieving university level. Suppose then the 10 university graduates have incomes of 11100, 11200, 11300, 11400, 11500, 12100, 12200, 12300, 12400, 12500. Let’s denote the median income of high school graduates as X2 and that of university graduates as Y2. Note that the median income X2 is based on a smaller group size while that of Y2 is based on a larger group size. We can easily imagine that X2 will be lower than X1 because we can imagine that the top five earners (“more able”?) were removed from the original high school group and put into the university group. And Y2 will be lower than Y1 because the university group includes the “less able” ones.

Thus, if we compare the change of median income by education groups, we are bound to see a deterioration in income in BOTH GROUPS. Some would conclude that education expansion is bad.

Wait a minute. Obviously, the five persons who achieved university level because of the education expansion achieve a higher income. (11100, 11200, 11300, 11400, 11500) versus (8100 8200 8300 8400 8500). A substantial improvement in social mobility (as measured by income) due to the education expansion, isn’t it?

That is, we are evaluating whether education expansion is useful, we should focus on these 5 persons who had not the chance to study university but now have the chance to do so.

If we still insist on using measures similar to median income of the university graduates across time to conclude whether university graduates are doing worse than better, we need to make an adjustment. From the example above, we probably should compare the top 25 percentile income level today to the median income 10 years ago!

Generalization based on the sample size of one

Posted in Hong Kong, Statistics/Econometrics, teaching, Water by kafuwong on July 21, 2015

Recently, lead in water has occupied headlines of major newspapers in Hong Kong. Experts are consulted. Some experts appeared to mis-speak carelessly. The most laughable statement was made by a medical doctor, who is a consultant of the “Hong Kong Poison Control Network”. He remarked that lead poisoning can be caused by chewing on a pencil, among many other causes. It was so laughable that it is widely circulated on the internet.

Admit it, most of us do not know why this statement is laughable. OK. It is laughable because pencils (called “lead” pen in Chinese) do not contain any lead in the writing core nowadays. Although the writing core of some early pencils were made of lead, it has since replaced by the non-toxic grahpite. (http://pencils.com/pencil-history/) And, the statement came from a consultant of the “Hong Kong Poison Control Network”.

In fact, at least supposedly so, nowadays even the paint cover of pencils should not contain lead so that most pencils are safe for chewing (not encouraged).

—–

Internet is a powerful tool. A friend appeared excited about the lead poisoning from pencil chewing story that he added a catchy title to his sharing of the news report about the doctor’s statement: “If you cannot trust doctors, who can you trust?”

It is this catchy and exaggerated statement that caught my attention. I have to admit, I like it.

Nevertheless, the statement is clearly too much a generalization based on the sample size of one. That “specific doctor” may not be trustworthy on this specific issue, but it does not mean that “specific doctor” is not trustworthy on other issues. Certainly, it does not mean that other doctors are not trustworthy.

Beware of similar generalization from a small sample of observations.

Repairmen needed to give electrical pencil sharpeners a second life

Posted in Economics, Environment, Hong Kong, Parenting by kafuwong on July 16, 2015

A year ago, the ten-year-old electric pencil sharpener in our office began to fail. It was one of those better electric pencil sharpeners and could stopped automatically on sharpened pencils. Our office had no choice but to dispose the old one and to buy a new one of the same model. I took the old one home to let my son play with it.

The new one malfunctioned within days. As it was under warranty, the office then got a replacement. The newly replaced one worked but lacked the function of automatically stopping on sharpened pencils. My colleagues called the company for a repair. The salesperson said the new one did not have this function of automatic stopping and refused to send anyone to repair it. (Bad salesmanship, and lies as well!) After a year, it failed. Now, as it was no longer under warranty, the office decided to discard it. Again, I took it home to let my son play with it.

Were we successful in resurrecting the two pencil sharpeners? To my colleague’s surprise, we did. (I said “we” because I made substantial contribution.) On the ten-year-old pencil sharpener, we discovered that it just needed some oil — it took us a long time to discover. After applying some oil, it worked like new.

One the one-year-old, the major problem was a mis-alignment of a switch. Not only that we brought it back to life successfully, we also fixed the function of automatically stopping on sharpened pencils.

No, I am not trying to brag about how good we are in repairing the machine.

Here is my observation: Many years ago (when I was younger), a lot of broken electrical appliances were repaired and used for a long period of time. Now, most broken electrical appliances are thrown away. The natural question is WHY!

I think the answer lies in the cost of purchasing new electrical appliances and the labor cost of repairment. The labor cost has gone up substantially in Hong Kong. The cost of buying new electrical appliances is low. When the cost of repairment is higher than the cost of buying new electrical appliances, the decision is not to repair. As more people make similar decisions of not to repair their broken electrical appliances, more broken electrical appliances will end up at landfills.

How to reduce the amount of broken electrical appliances in landfills? We need more rag-and-bone men and repairmen.

Anyone interested in joining me to collect and repair broken electrical pencil sharpeners?

Can you believe that?

Posted in Hong Kong, Information by kafuwong on July 2, 2015

Saw an article a couple days ago about a comparison of prices of beer across the globe.  Hong Kong is the second most expensive city to consumer beer at the pub.  (http://www.scmp.com/news/hong-kong/economy/article/1830376/hong-kong-second-most-expensive-city-world-beer-drinkers)  Should we be surprised to see the catchy DISTORTED titles such as “Hong Kong second most expensive city in the world for beer drinkers”?  

I could not help sharing it with a beer buddy who knows a thing or two about beer and has been in Hong Kong a couple of times.  I added my observation:  “Much cheaper to buy from supermarkets.”

I am not surprised that he had already seen the study because beer is always on his radar.  Here is his comments:

This study has been well publicized but has a fundamental distortion in its methodology. I read the longer version in the Wall Street Journal. It picked the bar prices from only three hotel chains..Hilton, Best Western, and Holiday Inn..to create its pricing index. As most travelers know, hotel bar prices are likely to be inflated over the regular market offerings. This is well illustrated by the bar prices published for Prague with an average price of $4.32 for a 1/3 liter. Even very good microbrews in a normal Prague pub sell for around $1.80 for a 1/2 liter.

So while the study may be generally correct in a comparative analysis of bar prices for cities, it gives a distorted pricing level. It’s pretty much like most of those ever-present annoying “best or most expensive cities” lists in which the originator (usually in the travel or relocation business) of the “study” uses an expedient methodology that addresses the tourist or ex-pat with company/institutional financial subsidy audience instead of the traveler or resident of those cities.

I think we have a lot to learn from him.  In reading any report, mind the details.  The title “Hong Kong second most expensive city in the world for beer drinkers” is biased/distorted and is meant to catch our attention. I wonder how many of us would question the information contained in the title?  How many of us would read the news content for additional information.    How many of us would try to read the report to find out what is really in it? How many of us would read the “fine print” and “research methodology” in the report for additional information?

The problem is: when we have so much information floating around, how can we read the details of every report and be able to tell which is trustworthy and which is not?  Difficult!

At least, now, we know not to trust the newspaper title “Hong Kong second most expensive city in the world for beer drinkers” and anything similar.

Why were there no toilet papers in the public washrooms in the old days?

Posted in China, Economics, Parenting by kafuwong on May 8, 2015

Most readers are astonished: Most of the “wind chimes” hanging on trees for a “Wind Chimes Festival” in China were stolen by tourists/visitors!

Tourists should not have stolen the wind chimes, should they? It is not ethical to take the wind chimes that is not yours.

On the other hand, shouldn’t the officials organizing the festival have predicted the stealing to happen? Not many years ago, Hong Kong provided no toilet papers in the public washrooms. Simply because the whole roll of toilet papers would be taken away as soon as it was installed. Anticipating this outcome, the government officials decided not to supply toilet papers in public washrooms (or at least not to replenish).

Why would Hong Kong people not remove the whole roll of toilet paper from public washrooms nowadays? Hong Kong people has become more ethical? Was there a campaign to teach Hong Kong people to be more ethical, and not to remove the whole roll of toilet paper from public toilet?

Yes, it is possible that Hong Kong people have been educated to become more ethical. On that, I am not so sure. I think the more important reason is that Hong Kong people has become richer. A roll of toilet paper is nothing when compared to their income/wealth. That is, richer people tend not to steal things like the toilet paper. (They may steal things that are of bigger value relative to their income/wealth.)

Thus, if the “wind chimes” is cheap relative to the tourist income/wealth, we would expect the wind chimes to stay on trees for a while. If the “wind chimes” is expensive (say gold wind chimes) relative to the tourist income/wealth, we would expect the wind chimes on trees to be gone in no time.

The redemption rate of cake coupons

Posted in Economics, Hong Kong, Information, teaching by kafuwong on February 16, 2015

A friend was trying to redeem his cake coupon from a chain bakery. His coupon was two days from expiry. If he had not done it in time, the chain bakery will gain.

Hm… What is the redemption rate of cake coupons? That is, how much do the chain bakery gain per year due to people’s failure to redeem their coupons?

I do not have the numbers. Nonetheless, here is a thought experiment.

Imagine that 40% of the cake coupons are not redeemed. Shop A is willing to sell the coupons at 60% of the nominal value. Of course, shop A will try to sell the coupons at the nominal as much as it can. Selling at full nominal value will ensure a gain of 40 dollar gain per 100 value of coupon. This is good money.

The problem is that shop A is not alone. Likely, shop B also sells similar coupons. If shop A is selling at full nominal value, shop B can steal shop A’s customers by selling the coupons at a small discount, say 5%. If information is perfect, all customers will buy the coupons from B. But, A is not stupid. Seeing the loss of customers, it will try to steal shop A’s customers by selling the coupons at a bigger discount, say 10%. …. We can easily see that this competition game will continue until both shops will be selling near at 40% discount. We see the power of competition.

Now, how do we get an estimate of the redemption rate? Easy. We go to shop A, tell them that we are going to get marry and are planning to buy a lot of cake coupons, and ask them the discount we can get. Do the same to shop B, just to double check. That “1-discount” will be close to the redemption rate.

Does it look suspicious to you? Check please!

Posted in Economics, Information, Leisure, teaching by kafuwong on October 9, 2014

A friend sent me a striking table of “actuarial study of life span vs. age at retirement”. The table shows a person who retires at age 49.9 will die at 86 on average, and a person who retires at age 65.2 will live to 66.8 on average. The data suggests that I should consider retiring early.

Wait a minute! A person who retires at age 65.2 will live to 66.8 on average? It is absolutely not consistent with my casual observations.

I could not help doing a quick search of “actuarial study of life span vs. age at retirement” (without the quotation marks, of course). Surprisingly, I found that the table was founded based on a real study –- a Boeing study done almost 30 years ago. The study has been circulated in the internet for many years and finally reached me. Lucky me!

Interestingly, Boeing has tried to tell the public that the chart or table was wrong. According to Boeing, there is simply no correlation between age at retirement and life expectancy of Boeing retirees.

Why are such rumors still around? I think it is because most users in the internet are not willing to spend much time questioning and verifying the accuracy of the information. Spreading some seemingly striking news/information attracts attention. Most of us feel happier with more attention from our friends. There is a cost of verifying the accuracy of the information, though. Such comparison of COST and BENEFIT dictates our decision whether to spread the rumors, though implicitly.

Spreading news/information is understandably more costly to people with good reputation of providing accurate information. Thus, one would expect reputable reporters less likely to spread news/information without careful verification. That tells us where to turn if we want accurate information and where to turn if we want some rumors to enjoy.

I do not like this kind of rumors. I try not to spread suspicious items. At the same time, though, I do like to test my ability in catching such problematic information and verifying them. It has become one of my major pastime. LOL.

Additional readings:
http://www.boeing.com/companyoffices/empinfo/benefits/pension/seminars/Rumor.pdf
http://www.intmath.com/blog/retiring-early-means-a-longer-life-an-urban-myth/822
http://www.bbc.com/news/magazine-18952037