Wednesday, December 31, 2008

The invisibility of luck

I got this passage off of Curt Schilling's blog; he's the one responding to the question:

"Bradford: When referencing this potential move, some have cited the Yankees decision to go with high-priced talent in the early 2000’s instead of the “heart and soul” guys that were on the championship teams. Is that kind of chemistry/clubhouse influence overstated?

Me: No, no and a million more times no. The easiest way to figure that out is to play fantasy baseball right? Take the 2004 Yankees on paper, play them against ANY other 2004 team and play a 5×5 league. How do they fare? I’d expect REAL well and pretty dominating? There is so much that happens outside the 3-4 hours of games each day
that impact and influence teams in a way no statistician or ‘expert’ can ever hope to define or quantify. It affects wins and losses, it affects clubs state of mind, it affects everything."

Let me preface this by saying I don't dislike Curt Schilling like a lot of people do; sure, he's loud and opinionated, but isn't that what we want from athletes? Don't we get tired of them not giving real answers to questions?

Anyway, with that out of the way, his answer is quite fascinating for how it illustrates the average person's complete unawareness of luck, randomness, and small sample size. He points out the fact that the 2004 Yankees would dominate any other 2004 team in fantasy baseball as evidence of the effect of intangibles on baseball performance. It's hard to see how that's evidence because, in real life, the 2004 Yankees damn near made it to the World Series. Schilling clearly believes it was intangibles and clubhouse vibe that made them miss it, but, let's face it: they lost their ticket to the big show over the course of 4 games. That's an extremely small sample size, it could have easily gone the other way, and the Red Sox had luck on their side. Now, granted, this isn't to say the 2004 Red Sox weren't a good team, because they were a great team, and got to the World Series in part through excellent performances. However, it's not enough just to be good; sometimes you need luck on your side, too.

What's fascinating about this is that Schilling, of course, was right in the middle of that Red Sox performance. He, clearly, believes that luck played no role in his team's victory, but rather it must have been entirely their performances. Although he has benefited from luck, he is blind to it. I suspect this happens quite often to people. When remarkable things happen to them, they are blind to the extent to which it was just dumb luck, and must find reasons to ascribe to them.

The Moneyball Fallacy

There's a common fallacy that I see people make; I don't think it has a technical Latin name like most good fallacies, so I like to call it the Moneyball fallacy. Moneyball is a book from 2003 chronicling the Oakland A's front office, led by their general manager Billy Beane, who have applied new statistical principles to find baseball players undervalued by the market, allowing them to remain competitive as a low-revenue, small-market team. Probably the most famous statistical principle from the book is the idea of on-base percentage, which, unlike batting average, looks at how often a baseball player gets on base in any way, including walks, which are ignored in batting average. Beane and the A's front office found that on-base percentage was both extremely valuable and widely ignored, and therefore cheap.

The lesson of the book is that new knowledge can and should be used to exploit inefficiencies in a market, particularly when traditional impulses cause the new knowledge to be widely ignored. The lesson that everyone got from the book, however, is that on-base percentage is important, and now it is, in fact, overvalued in the market. That's the Moneyball fallacy. It's the fallacy of ignoring the real, more general, underlying lesson from a situation or experience and instead focusing on and taking away the simpler, more contextual, less valuable lesson. This fallacy can be seen all the time in all sorts of fields. For example, during coverage of the 2004 election, broadcast networks waited until late in the night to announce the results from the Florida election, but announced the results from the Ohio election relatively early even though it ended up being closer than the Florida election. This is because the the lesson they got from the 2000 election debacle was "Call Florida correctly", not "Don't call any states until you're certain of their outcome."

I brought this up because I had a very current and topical example of the Moneyball fallacy in action, but now I can't remember what it was. Hopefully I will.

That one song...

I've heard that the part of the brain that processes smell connects directly to the hippocampus, the part of the brain that deals with memory. This supposedly means that certain smells can very quickly evoke powerful memories. I have experienced this a few times, but never quite that strongly, and I only ever noticed it after I heard that about the hippocampus. What does really bring me back are songs, but only certain songs. I noticed this listening to the song "It's the End of the World as We Know It" by R.E.M. the other day. There are certain songs, and that's one of them, that somehow manage to transport me to a different time, and have a certain quality about them that seem to connect me to something greater than myself that's simultaneously very powerful and completely illusory. What's particularly remarkable about that song, and many others like it, is that it's not a song I've ever had on CD or on my iPod; it's not one I ever listened to regularly at any point in my life, and yet it seems incredibly linked to my past. I wish I understood what this quality that certain songs have is, but all I know is that it exists: there is some bizarre way to make a song seem like it was part of my life even though it never was.

I've indicated elsewhere in this blog that I've tried songwriting and failed miserably, but whenever I hear a song like the one I just described, I wish that I could write just one song like that in my lifetime.

Friday, December 26, 2008

If someone had asked me...

“On a lighter note, do you wish your daughter would have married a better defensive coordinator?”

I would've replied, "Does your wife wish she hadn't married a total twat?"

Thursday, December 25, 2008

Foreign Guitars and Price Discrimination

So, I was thinking about guitars the other day. I got to thinking about how imported guitars are generally perceived as inferior quality compared to guitars made in the USA. Now, as an econ major, I can state quite confidently that there is no reason that a guitar made overseas should necessarily be of worse quality than one made in the US solely by virtue of the fact that it's foreign made.

Now, it may be the case (and I believe it is, in fact, the case) that, on average, foreign made guitars are lower quality than American-made guitars, but this isn't directly because of which side of the American border they're made on. There's nothing inherent about Americans that makes them better at building guitars than Koreans, or Mexicans, or the Vietnamese, etc. I suspect that American guitar makers (luthiers, to use the technical term) tend, on average, to be more skilled at guitar-making than foreign guitar makers, but this isn't because they're American. You could, undoubtedly, find and/or train perfectly talented luthiers in other countries, and they'd be able to produce guitars cheaper, because of the relative abundance of labor* in that country.

*note that the glaring flaw in my analysis here is the assumption that the labor required for building good guitars is either virtually the same as the labor required for building cheap guitars, or that it's different but both kinds of labor are relatively abundant in the other country. More on this later.


So, to try to illustrate my point, consider two guitars: the Fender Standard Stratocaster and the Fender American Standard Stratocaster. They're two variations on the same model, mainly distinguished by the fact that the latter is, unsurprisingly, made in America, instead of Mexico, like the former. The Standard Strat retails for $399.99, and the American Standard for $999.99. Now, there are concrete things, other than the country of manufacture, that make the American Standard Strat a better guitar. It has better pickups, better paint options, a better tremolo system, better hardware, better wiring, etc. However, there is no reason a guitar identical to the American Strat, with all the improved options, couldn't be made in Mexico. And if it were made in Mexico, it would be cheaper. AFAIK, and here's where the above asterisk comes into play, there is nothing about using the improved materials and hardware that requires a different sort of labor. So, in other words, Fender could make a guitar identical to the American Strat but make it in Mexico, and it would only cost, say, $600 as opposed to the $1000 they currently charge. Why don't they do this?

My best guess is price discrimination. Price discrimination is when a firm that faces a downward sloping demand curve tries to get different consumers to pay different prices based on what they're willing to pay. For example, let's say that a firm sells a product, and if they charge $100, they'll be able to sell 50 units of that product, and if they charge $50, they'll be able to sell 200 units of said product. Clearly, if these are the only two prices they can charge, they'll charge $50, because that generates a revenue of $10,000, as opposed to the revenue of $5,000 that charging $100 generates. However, if they charge $50, they're charging every customer that price, and there are 50 customers who were willing to pay $100 per unit (assuming each customer buys one unit) but are now only paying $50 per unit. If the firm could somehow charge these 50 customers the $100 they're willing to pay, they'd generate a revenue of $12,500. However, this is easier said than done, because it requires identifying the customers who are willing to pay more than $50 without actually going right up and asking them, because of course no one is going to come out and say how much they're willing to pay. A variety of firms in a variety of industries have found ways around this.

I suspect Fender is engaging in something similar. They're segregating the market into consumers looking for a low price guitar, and consumers willing to pay more for quality. By producing their highest quality guitars in America, they're charging consumers who want to pay more for quality, and are presumably willing to pay more, an additional surcharge for an American made guitar, while lowering the price on lower quality guitars (by having them made overseas) for consumers who are more concerned with low cost. This, I believe, is the reason that American-made guitars tend to be higher quality; not because Americans do a better job of making guitars, but the nature of the market means it makes sense to produce higher quality guitars in America.

(NB. It is, strictly speaking, inaccurate to refer to this as "price discrimination", because that refers to charging different groups of people different prices for the same product, which clearly Fender isn't doing. However, I feel that the basic idea is similar; at the very least, it made me think of the idea of price discrimination.)

Wednesday, December 24, 2008

The MFY

When I was a kid, I liked the Yankees. I wouldn't call myself a Yankees fan, because I reserved that for my hometown teams (the Brewers and later the Diamondbacks), but I liked them.

Of course, I would have a hard time really characterizing myself as a baseball fan at that time, because I knew so little about the game and really didn't follow it very closely, yet somehow I deeply cared about it. In retrospect, it seems odd, but it made sense at the time. I guess a lot of it had to do with not having ready access to a computer; hobbies are different without easy access to reams of information constantly. (I've often wondered what my childhood would have been like if Wikipedia and broadband had existed when I was young, but that's a topic for another time).

Anyway, when I was a child, I suppose the main way I expressed my baseball fandom was through having baseball hats. I had a collection of several teams, chosen mainly based on which ones I thought had the best logo. To this day, I'm fascinated by uniforms and logos and hat insignias, but at least now I understand the connection between wearing a certain teams hat and supporting them. I didn't really get that when I was a kid, so I ended up with certain things like an Orioles hat (not only a picture of a bird, but with orange, my favorite color) or an A's hat (in addition to being bright green, the A is in a cool font and, c'mon, it's the only hat in baseball with an apostrophe-s on it), and, of course, a Yankees hat. The interlocking NY (from what I understand) was created by designers at Tiffany's, and, much as I hate the MFY these days, I won't deny that it's a cool looking logo. I didn't have a Red Sox hat then; it was just a boring B. Of course now, having spent plenty of time in the Boston area, I own multiple Red Sox hats; I think they materialize on your head if you spend too much time around Kenmore Square.

So, as a kid, not only did the Yankees cool logo appeal to me, but also the fact that they were clearly the premier team among all 28 (later 30) MLB teams. I mean, much as I hate Yankee exceptionalism now, they are the winningest team, have by far the most championships, and Babe Ruth played for them. It wasn't hard to like them.

This started to change a little in 2001, when I got to root against them in the World Series and watch the Diamondbacks demolish them. While I did root against them, there weren't really any hard feelings, because the Diamondbacks did, indeed, demolish them, outscoring them 37-14 and mounting an epic 9th-inning comeback against the greatest closer in baseball history, Mariano Rivera.

In 2003, however, I really began to feel and understand Yankee hatred. When I realized there was a possibility of a Cubs-Red Sox World Series, I was quite excited. Here was something interesting: a World Series where the winner was guaranteed to be a team that hadn't won a World Series in at least 80 years. That was worth getting excited about. When it ended up being Yankees-Marlins, the worst possible outcome, I was quite upset, and hoped at the very least the Yankees would lose, because nothing could possibly be more boring than the Yankees winning the World Series again.

It was that thought, that the Yankees winning is boring, that started to crystallize things for me. And, of course, the next year, when the Red Sox were down 3-0 in the ALCS, I rooted for the Red Sox to win, because nothing could possibly be more boring than the Yankees sweeping an LCS, and, furthermore, few things could be more interesting than a team coming back from 3-0, especially if that team hasn't won the World Series in 86 years.

Finally, when I actually became interested in baseball for real recently, and spent enough time in Boston to understand the Red Sox and their fans, my Yankee hatred came into full bloom. It quickly became apparent how impossible it is to be a fan of the Milwaukee Brewers, one of the most ignored and marginalized teams in all of baseball, and not to resent the Yankees and their gigantic payroll and notoriety.

Of course, the same thing could be said about resenting the Red Sox, who have the second biggest payroll and second most notoriety, but there's something different about it.

Although the impetus for this post was the Yankees' signing of Mark Teixeira, it isn't really the Yankees' profligate spending that inspires this hatred. As much as it galls me to see the 3 highest-paid free agent signings so far going to the same team, as disturbing as it is to see the two consensus biggest stars of the free agent crop going to the same team, I understand. Any team with that kind of money would spend it. I am quite upset that the Brewers have lost the Yankees' first round draft pick on account of the signing, but that's really more a fault with the compensation system, not with the Yankees.

Closer to the point is the way the Yankees spend their money. It is hard to fault them for the Sabathia and Teixeira signings, as they are great athletes. However, it has mostly been to the Yankees' detriment that they ignore developing their young players in lieu of signing free agents. The Yankees' most recent run of success was when the Steinbrenners were forcibly taken out of the equation for a few seasons, and the Yankees were allowed to thrive with homegrown talent like Jeter, Posada, and Rivera. Free agent signings don't have to come at the expense of young player development; just look at the Red Sox. They have money to burn, and they have made free agent signings (Mike Lowell, J.D. Drew), but who's been the core of their team lately? Dustin Pedroia and Kevin Youkilis, their homegrown players. However, the Yankees seem to make free agent signings at the expense of young player development. The big story last off-season was how the Yankees were forgoing their old free-spending habits and instead concentrating on developing their young talent. They didn't trade for Johan, preferring instead to concentrate on Joba Chamberlain, Phil Hughes, and Ian Kennedy. When that didn't work out as well as they hoped and they missed the playoffs, they flipped and immediately reverted to their free-spending ways, leaving the rotation status of said prospects uncertain.

And, really, is the reason to hate the Yankees: they and their fans don't understand that they can't win the World Series every year. When they make it to the playoffs but don't make it to the big show, it's not just luck, it's a display of epic failure. If they miss the playoffs despite winning 89 games and having made them the past 13 years in a row, it's a reason to give up on young prospects and completely jump ship. I was talking to a Yankees fan who was lamenting that they missed the playoffs this year, and I said, "Yeah, well, at least you made it the last 13 years," and he said, "Yeah, but that's not a record." You can imagine how galling that is to a Brewers fan, ecstatic that he saw his team make the playoffs at all for the first time in his life. This is the galling idea: the idea that the Yankees are different, and are supposed to make it, and are entitled to make it, and are supposed to have all the best players, and are somehow always better, even when they aren't, just because they're the MFY.

Sunday, December 21, 2008

Consistency

In the course of my recent intense scholarly study of The Who, I've realized two things.

A) a ton, maybe even the majority, of Pete Townshend's songs use basically the same three chords (the I, IV, and flat-VII, if you're curious). "I Can't Explain", "Magic Bus", "Bargain", "Won't Get Fooled Again", "5:15", "Dreaming From the Waist", "Who Are You", and others are all basically written around those same three chords.

B) All of these songs not only sound distinct and unique, but they're all really excellent songs.

When I was under the illusion that I could actually write music, I was always trying to look for something new to do musically, something that no one had ever done before. I've since realized that it's more important to have something to say.

Wednesday, December 17, 2008

Left-handedness

I am a left-handed guitar player, which is a rare thing. Left-handers account for about 10% of the general population, but left-handed guitarists (defined as those who actually play guitar left-handed, not lefties who play guitar right-handed) constitute a much smaller proportion of the guitar playing population. This is mainly because left-handed guitars are so hard to find, which is of course a self-perpetuating prophecy, as left-handed guitars are even harder to find when so many lefties don't bother learning how to play left-handed. Anyway, the point is, I did learn to play guitar left-handed, and consequently, I have a hell of a time finding guitars. I learned to play left-handed mainly because I'm such a stubborn and prideful southpaw. That is to say, left-handedness is really important to me. I'm not entirely sure why, but I've always been very proud of the fact that I'm left-handed, and I refuse to sell myself short in any left-handed endeavor. My first guitar was actually a right-handed guitar that I re-strung to be left-handed. The funny thing is that although I intended to restring it from the beginning, it was about a month and a half before I finally did. Until then, I started learning to play right-handed, then started over again from scratch and learned to play lefty once I had restrung the guitar. That's how determined I was to be a left-handed guitar player.

And so, almost 9 years later, I am quite proud and happy as a left-handed guitarist, and I'm, ultimately, glad that I chose to learn the way I did. That said, it is such a pain in the ass to find left-handed guitars that I almost wish I learned to play right-handed. Almost. Of course, it's maybe a good thing that I've been prevented from blowing too much money on guitars; who knows how many I would've bought by now if I didn't have to find left-handed ones. But it's not just about buying guitars. Every time I go to a guitar store and want to try out different models, there are only about 3 or 4 I can really play, and that's at a big guitar store. Or whenever I go hang out with someone and they have a guitar, I can't very well borrow theirs to play on, because I can't play it. It's quite frustrating.

What this all adds up to is I recently asked myself what advice I would give to a left-hander who wants to learn to play guitar. Would I suggest they go the easy, conformist way and just learn to play right-handed? Or would I suggest they stick it to the man and learn to play lefty? I decided that it's all about how important left-handedness is to you. If, like me, you consider your handedness to be a tremendously important, defining characteristic, well, clearly you should stick with that. If you don't, then just take the easy way out.

Saturday, December 13, 2008

Creating a blog to try to make myself write regularly

So, I have a lot of conversations with myself. I don't think I'm unique in that regard. Usually when I'm sitting around doing nothing (which is most of what I do), I'll start contemplating something, and for me, contemplating means asking myself questions, and creating an interlocutor in my head who questions me. Sometimes it gets so bad that I'll refer to myself in the 1st person plural. Anyway, this is only tangentially related to my main point. I feel I have a talent for writing. Furthermore, I feel writing is an occupation I would enjoy. However, I don't seem to have the temperament for it, so I want to try to force myself to write on a regular basis, and so I'm going to try to force myself to write down the conversations I have in my head. Hopefully the next time I have a conversation with myself, in my head, I'll tell myself, "Hey, Polak, stop doing this in your head and start writing it down," and then I will write it down here, repeat ad infinitum, and end up writing regularly. It probably won't work, because I have a hard time ever making myself do stuff. Even if it does work, it probably won't be interesting, but that's not the point. The point is habit first, and then (hopefully) the interesting will follow. I hope this works.