The Grilled Cheese

As you can see, the app succeeded in recognizing that there was some variation in my movements throughout the night. And it works. Each morning I have awoken pleasantly, which is not my norm (as my parents know from trying to get me out the door to school).

Or does it? I can't help but wonder if I'm waking up well because I expect to wake up well. In other words, is it simply a placebo effect? I've thought a bit about this, and I've come to a pretty confident answer: no. It is not a placebo because it works even now when I'm doubting its efficacy. 

But my doubt isn't out of the Negative Nancy Woods just yet. I could be waking up well because I want the app to work. I have a vested interest in the app working. Namely, I don't want to look like a fool for paying 99 cents for something that doesn't work. I'm not sure what this bias might be called, but it seems to be related to cognitive dissonance, demand characteristics in psychological research, and most closely to choice-supporting bias. It's not quite the latter because I'm not ascribing positive attributes to the app, I'm actually feeling the results of those positive attributes. Does somebody have a name for this?

Of course, I may very well be over-thinking this one, so lets try something. I'll buy the app for the first 5 people who ask me*, as long as they promise to test it out and tell me what they've found.

*You must have an iPhone to get into this cool club.

You can always count on Dan Ariely to explain difficult or vague concepts simply, succinctly, and so that everybody will understand. I read just about anything of his I come across. The world needs more thinkers like him. Here are his thoughts on his own field (and mine), behavioral economics:

In general, both standard and behavioral economics are interested in the same questions and topics.  The choices people make, the effects on incentives, the role of information etc. However, unlike standard economics, behavioral economics does not assume that people are rational. Instead, behavioral economists start by figuring out how people actually behave, often in a controlled lab environment in which we can understand behavior better, and use this as a starting point for building our understanding of human nature. As a consequence of this different starting point, behavioral economists usually come to different conclusions about the logic and efficacy of almost anything, ranging from mortgages to savings to healthcare in both the personal and business realms.

Click here to download:

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I am always somewhat disappointed by fireworks shows. It's not that they aren't spectacular (check out the finale of St. Louis' 4th of July show above), it's that they are all the same. Why hasn't there been the same type of innovation in fireworks as there has been in almost every other technological product? I'm not even asking for Gandalf or Fred and George awesomeness. Just something more creative than heart shapes and twirly white things.

But that's fireworks shows, when some unseen person on a barge or a computer is setting them off. It's a whole different story when you do them yourself. Then even the smallest shells are thrilling and unbelievably cool.

Doing something yourself carries a lot more weight than watching others do it. This is especially true when experts are involved. We expect so much out of experts of all sorts that we can often be disappointed. On the flip side, our lower expectations for friends and other normal people lets us revel in even their smallest accomplishments. For instance, art in museums doesn't excite me unless it's really crazy, but if a friend paints something with any sort of skill I'm really impressed. The same goes for sports, photography, writing (friends, isn't my so so writing really awesome?), cooking, and much more.

PS: The best place to set off fireworks is by a lake. My suggestion is to fire them horizontally over the water. You'll get awesome reflections and some great photo opps. This is one I took on spring break of my freshman year down in Georgia:

Let me ask you a question: have you ever wondered why star athletes go for the biggest contract, even when that team has no shot at winning? Me too, but I think I finally understand why, and it has to do with the strange things going on with money.

Money (dollars in the US) has two main functions. First, it is a unit of currency, traded for goods and services. Second, it is a measure of the value of every aspect of life; how happy we are, how healthy we are, how good we are, and more. In technical terms, it is a measure of utility. On one level, that we use dollars as units of both currency and utility makes a lot of sense. We spend currency based on how much goods or services are worth to us (just another way of saying how much utility they provide us), so why not use units of currency to describe utility? And in a world where everything can be measured precisely, this method might just work.

But we don't live in that world, and we never will. And even if we did, some things are simply impossible to buy or sell: you can't buy your parents, you can't sell your neurons, and you can't purchase friends off the Wal-Mart shelf. And as long as some things remain outside of the realm of currency, then fall solely into the realm of utility. This might not be a big issue. Couldn't we learn to distinguish between the two uses? Maybe, but there is one difference between currency and utility that makes all the difference. 

It has to do with scale. Since currency is a theoretical construct, separate from the physical world, it operates on a linear scale: the amount of stuff a dollar can get you is always the same (not counting inflation, of course). But utility is a direct representation of our physical world, and in our physical world we face diminishing marginal utility. In other words, more stuff is good, but not quite as good as the last stuff. After a certain point, making one more friend is not going to add as much to our happiness as the last friend we made. 

We are so used to dealing with dollar amounts and currency sums that they are more prominent in our minds than the utility they represent. And we are not very good at translating currency into matters of utility. This is especially true when the utility-granting goods or services are far outside our experience, like when dealing with large sums--it's not easy to imagine what $50 million really means in terms of utility. Therefore we often forget about the utility side of things, only taking currency into account. And because currency is on a linear scale, we forget about the diminishing returns to the utility aspect of money, which leads us to take too much money and not enough of the things we want but cannot buy.

This has been a complicated post. So complicated that I've had to rewrite it four times so that it makes sense to me. Let's recap:

1. Money has two functions: currency and utility
2. There are many things in this world that can only describe with utility since they can neither be bought nor sold.
3. Currency operates on a linear scale, while utility faces diminishing returns
4. Currency is more salient than utility, so we often base our financial decisions on matters of currency over utility
5. We are not good at translating currency into utility
6. And so we often don't take diminishing returns into account in our financial decisions
7. Therefore we can end up with too much money and not enough of the things we really want but can't buy

Coming up, I want to talk about what this might mean for the field of economics.

The human vocal system must be essentially the same across cultures, races, and regions, so I would think that lip readers would be able to pick up on differences between accents. Surely strong accents should confuse some lip readers, but can skilled and experienced ones actually recognize the differences?

I did a quick search, and I couldn't come up with anything more reliable than forum anecdotes. Thoughts?

Making a macro difference through micro donations.

That's the mission of a new non-profit that aims to increase online charitable giving. Beanstalk Giving hopes to take advantage of the same principle that I've discussed before, that people are more likely to give when their donation is a small sum on top of a purchase they are making. And, thanks to an API that will integrate easily into online retailer's checkout processes, I think it will succeed.

I believe that one of the best ways to make a true difference in the world is by helping others find a way to make a difference. In my opinion there are not enough organizations in the world that do this, and I am excited to see another one sprout up (no apologies for that pun; it was damn good and you know it). 

Find Beanstalk Giving on their website, Facebook, and Twitter pages.