1. As Grusky argues, the current high wage earners whose high wages depend on education and lack of competition from similarly educated men and women (High Education Low Competition or HELCO) from similarly highly educated will start earning a lower wage because of increased competition (thereby reducing inequality). This is assuming that HELCO won’t respond by trying to burnish their education credentials, etc. This is also assuming that HELCO exists as a large class. What likely exists, instead of HELCO, success attributable to networks, etc. That kind of advantage cannot be blunted by increasing education among those ‘not in the network’.
2. Another possibility is that education increases the number of high paying jobs available in the economy and it raises the boats of non-HELCO more than HELCO. There is some evidence for that, though mostly anecdotal.
3. Another plausible scenario is that additional education produces only a modest effect with non-HELCO still mostly doing low paying jobs. This may due to only a modest increase in overall availability of ‘good jobs’. This outcome is in fact likely if data are any indication. Already easy access to education has meant that many a janitor, and store clerks walk around with college degrees (see Why Did 17 Million Students Go to College?, and The Underemployed College Graduate).

Without an increase in ‘good jobs’, the result of increase in education is an increased heterogeneity in who succeeds (random draw at the extreme) but no change in proportion of those successful. Or, increasing equality of opportunity (a commendable goal) but not reduction in economic inequality (though in a multi-generation game, it may even out). Increasing access to education also has the positive externality of producing a more educated society, another worthy goal.

How plentiful the ‘good jobs’ are depends partly on how the economic activity is constructed. For instance, there may have once have been a case for only hiring one ‘super-talented person’ (say ‘superstar’) for a top shelf job (say CEO). Now we have systems that can harness the wisdom of many. It is also plausible that that wisdom is greater than that of the superstar. It reasons then that the superstar be replaced; economic activity will be more efficient. Or else let other smart people who can contribute equally (if educated) be recompensed alternately for doing work that is ‘beneath them’.

Let’s consider a minor variation of Ariely’s experiment. Assume there are two different menus that look as follows –
1. 400 cal, 500 cal.
2. 400 cal, 500 cal, 800 cal.

Assume that all items cost and taste the same. When given the first menu, say 20% choose the 500 calorie item. When selecting from the second menu, percent of respondents selecting the 500 calorie choice is likely to be significantly greater.

Now why may that be? One reason may be that people do not have absolute preferences; here for specific number of calories. And that people make judgments about what is the reasonable number of calories based on the menu. For instance, they decide that they do not want the item with the maximum calorie count. And when presented with a menu with more than two distinct calorie choices, another consideration comes into mind – they do not too little food either. More generally, they may let the options on the menu anchor for them what is ‘too much’ and what is ‘too little’.

If this is true, it can have potentially negative consequences. For instance, McDonald’s has on menu a Bacon Angus Burger that is about 1360 calories (calories are now being displayed on McDonald’s menus courtesy Richard Thaler). It is possible that people choose higher calorie items when they see this menu option, than when they do not.

More generally, people’s reliance on the menu to discover their own preferences means that marketers can manipulate what is seen as the middle (and hence ‘reasonable’). This also translates to some degree to politics where what is considered the middle (in both social and economic policy) is sometimes exogenously shifted by the elites.

That is but one way a choice on the menu can impact preference order over other choices. Separately, sometimes a choice can prime people about how to judge other choices. For instance, in a paper exploring effect of Nader on preferences over Bush and Kerry, researchers find that “[W]hen Nader is in the choice set all voters’ choices are more sharply aligned with their spatial placements of the candidates.”

This all means, assumptions of IIA need to be rethought. Adverse conclusions about human rationality are best withheld (see Sen).

Further Reading -
R. Duncan Luce and Howard Raiffa. Games and Decision. John Wiley and Sons, Inc., 1957.
Amartya Sen. Internal consistency of choice. Econometrica, 61(3):495– -521, May 1993.
Amartya Sen. Is the idea of purely internal consistency of choice bizarre? In J.E.J. Altham and Ross Harrison, editors, World, Mind, and Ethics. Essays on the ethical philosophy of Bernard Williams. Cambridge University Press, 1995.

1. older browsers are likelier to display the survey incorrectly.
2. type of browser can be a proxy for respondent’s proficiency in using computers, and speed of the Internet connection.

People using older browsers may abandon surveys at higher rates than those using more modern browsers.

Using data from a large Internet survey, we test whether people who use older browsers abandon surveys at higher rates, and whether their surveys have larger amount of missing data. Read More >>.

While a fair proportion of misinformation is likely created deliberately, it may well spread inadvertently. Misinformation that people carry is often no different than fact to them. People are likely to share misinformation with the same enthusiasm as they would fact.

Attitude congenial misinformation is more likely to be known (and accepted as fact), and more likely to be enthusiastically shared with someone who shares the same attitude (for social, and personal rewards). Misinformation considered ‘useful’ is also more likely to be shared, e.g. (mis)-information about health related topics.

The chance of acceptance of misinformation may be greater still if people know little about the topic, or if they have no reason to think that the information is motivated. Lastly, these epidemics are more likely to take place among those less familiar with technology.

In many cricket matches, there is a clear advantage in bowling or batting first. This fact is often pointed out by commentators, and by captains of the competing teams in the pre-toss interview. However the opportunity to bowl or bat first is decided by a coin toss. While this may seem ‘fair’ – it really just means that one team is randomly handed the shorter end of the stick. Hence games are not decided on ability alone. One can derive estimates of the advantage by comparing results in cases where teams won the coin toss, and when they lost it.

At first glance, the imbalance may seem inevitable – after all someone has to bat first. One can however devise a baseball like system where short innings are interspersed throughout the day. If that violates the nature of the game too much, one can easily create pitches that don’t deteriorate heavily over the course of a game, or come up with an estimate of the advantage and adjust the target for the team by that estimated amount (something akin to an adjustment issued when matches are shortened due to rain).

Empirical Analysis
Data are from nearly five thousand one-day international matches, and all international test-matches.

Toss likely plays a more crucial role on sub-continent pitches as the typically dry dusty pitches deteriorate faster under the harsh sunlight. It is also likely that toss is more crucial in day and night matches, due to dew and lower visibility of the white ball in the lights. It may well be case that toss is more important in tests than one-day matches.

The team that wins the toss wins the match approximately 46% of the times. This brings up the question as to whether the teams are choosing wisely.

[More soon..]

End of a nudge
One of the paper-towel dispensers I use has the following sticker –‘These come from trees’. This is a famous ‘nudge’ (In Sunstein/Thaler terminology). So far so good. Till perhaps few months ago, I always read the sticker when I used the dispenser. Yesterday I noticed that I had stopped noticing the sticker. This contrasts with my behavior towards the hotel notes about saving water – which I still read. I think that is so partly because there is so much time in a hotel room. ‘Nudges’ for quick everyday decisions perhaps need to change over time.

Successful attempts to cut Internet in Egypt and Libya also pose questions of a similar nature.

So two questions follow – should anything be done about it? And if so, what? The answer to the first is not as clear, but on balance, perhaps such (what is effectively) absolute discretionary control over the fate of ‘hostile’ information/or technology should not be the allowed. As to the second question – Given many of the hosting, banking companies, etc. essential to disseminating content are privately held, and susceptible to both government and market pressures, dissemination engine ought to be independent of those as much as possible (bottlenecks remain: most pipes are owned by governments or corporations). Here are three ideas –

1) Create an international server farm on which content can be hosted by anyone but only removed after due process, set internationally. (NGO supported farms may work as well.)
2) We already have ways to disseminate content without centralized hosting – P2P – but these systems lack a browser that collates torrents and builds a webpage in live time. Such a ‘torrent’ based browser can vastly improve the ability of P2P networks to host content.
3) For Libya/Egypt etc. the problem is of a different nature. We need applications like ‘Twitter’ to continue to function even if the artery to central servers goes down. This can be handled by building applications in a manner that they can be run on edge servers with local data. I believe this kind of redundancy can also be useful for businesses.

Given the purpose of a lottery is unequal allocation, it is important that informed consent be sought from the participants, and that it be used in consequential arenas only when necessary.

Fairness over the longer term
One particular use of lottery is in fair assignment of scarce indivisible resources. For example, think of a good school with only hundred open seats that receives a thousand applications from candidates who are indistinguishable (or only weakly distinguishable) – given limitations of data – from each other in matters of ability. One fair way of assigning seats would be to do it randomly.

One may choose to consider the matter closed at this point. However, this means making peace with disproportional outcomes. Alternatives exist to this option. For example, one may ask the winners of the lottery to give back to those who didn’t win – say by sharing the portion of their income attributable to going to a good school, or by producing public goods, or by some other mutually agreed mechanism.

Fair Selection
Random selection is a fair method of selection over objects where we have no or little ‘reason’ to prefer one over the other. When objects are ‘observably’ (as much as data can tell us) same, or similar – same within some margin, random selection is fair.

One may extend it to objects that are different but for no discretionary action of theirs, say people with physical or mental disabilities, though competing concerns, such as lower efficiency etc., exist. More generally, selection based on some commonly agreed metric – say maximal increase in public good – may also be considered fair.

As is clear, those who aren’t selected don’t ‘deserve’ less, and indeed adequate compensation ought to be the formal basis of selection, unless of course rewards once earned cannot be transferred (say lottery to get a liver transplant, which leaves others dead, and hence unable to receive any compensation, though one can imagine rewards being transferred to relatives, etc.).

One can extend that concept in the following manner – there are a variety of places where people must wait or have time to spare, where they also increasingly have their laptops and their cell-phones, for example, the airport, the airplane, the dentist’s office, the DMV, hotel room, etc., and where they look to browse the Internet without paying any money. There are other places where people just want access to Internet without paying (say cafes). Hence, one way to recruit people for surveys would be to give free temporary Internet access or local coupon(s) in return for filling out survey(s).

One can extend this method to ‘buying’ temporary Internet access more generally.

Think of a system that is coded to send a message to the controller to ‘alert’ it to damage and to ask it to reconsider engaging in activity that is causing the damage (or independently take pre hard-coded action). One envisions that the message is sent in a manner that ‘makes’ the controller pay attention, if such attention is warranted, and efficiently conveys a summary of what is going wrong and to what degree, and what particular action that the user is taking that is causing that to happen. One also imagines an ‘acknowledge’ button that the controller presses to assume responsibility of further action. Then using this information, controller, depending on the circumstance, takes action, and updates the memory and circuiting, if warranted, to create an appropriate aversion for certain activities.

Such signaling is implemented very differently in our body. Firstly it is implemented as ‘pain’. Next, pain is not proportional to the extent of injury. This sometimes creates ‘irrational’ aversion. More bizarrely, some harmful things are pleasant, while some good things are painful. Thirdly, there is no direct way for brain to acknowledge the signal, assume responsibility of action, and shut off pain. Next, and worryingly, depending on the extent to which our brain is distracted (say watching television), pain’s intensity varies (This last point has been exploited to build ‘treatments’ for pain). Lastly, our brains don’t have the capacity to temporarily order the signals shut.