CFTC Orders PredictIt Shut Down- Can Political Betting Survive?

Political betting has long been in a legal grey area. It seems that the Commodities Futures Trading Commission wants to make everything black and white, but at least for now it has simply made everything murkier.

PredictIt is the largest political betting site in the US; if you want to know who is likely to win an upcoming election, its the best place to find a quick answer. Prediction markets have two great virtues- they are usually right about what’s going to happen, and if they aren’t you can bet, making money and improving their accuracy at the same time.

PredictIt has operated since 2014 under a “no-action letter” from the CFTC. Effectively, the regulators told them “we’re not saying what you’re doing is definitely legal, but we know about it and have no plans to shut you down as long as you stick to the limits described in this letter”. But last week the CFTC withdrew their letter and ordered PredictIt to shut down by February 2023.

My first question was, why? Why shut them down now after 8 years when all their operations seem to be working as usual? The CFTC said only that “DMO has determined that Victoria University has not operated its market in compliance with the terms of the letter and as a result has withdrawn it”, but did not specify which of the terms PredictIt violated, leaving us to speculate. Did the scale simply get too big? Did they advertise too heavily? Did Victoria University, the official operator, let too much be handled by a for-profit subcontractor? Did some of their markets stray too far from the “binary option contracts concerning political election outcomes and economic indicators” they were authorized for?

PredictIt hasn’t been much clearer about what happened, simply putting a notice on their site. Their CEO did an interview on the Star Spangled Gamblers podcast where he said there was no one thing that triggered the CFTC but did mention “scope” as a concern- which I interpret to mean that they offered some types of markets the CFTC didn’t like, perhaps markets like “how many times will Donald Trump tweet this month”.

The other big question here is about PredictIt’s competitors. In 2021 it seemed like we were entering a golden age of real-money prediction markets, with crypto-based PolyMarket and economics-focused Kalshi joining PredictIt. I looked forward to seeing this competition play out in the marketplace, but it now seems like we’re headed toward a Kalshi-only monopoly where they win not by offering the product users like best, but by having the best relationship with regulators. Polymarket had offered markets without even a no-action letter, based on the crypto ethos of “better to ask forgiveness than permission”; this January the CFTC hit them with a $1.5 million fine and ordered them to stop serving US customers.

If the CFTC doesn’t reverse their decision to shut down PredictIt, then February 2023 will see a Kalshi monopoly. This has led to speculation that Kalshi is behind the attack on PredictIt; their cofounder issued this not-quite-a-denial. But it certainly looks bad for the CFTC that they are effectively giving a monopoly to the company that hires the most ex-CFTC members.

For now you can still bet on PredictIt or Kalshi (or even Polymarket if you’re outside the US). If you’d like to petition the CFTC about PredictIt you can do so here. It might actually work; while the CFTC’s recent actions certainly look cronyistic, they’ve been reasonable compared to other regulators. They’re giving PredictIt no fines and several months to wind down, and even Polymarket gets to keep serving non-US customers from US soil. I’d likely make different decisions if I were at CFTC but the ideal solution here is a change in the law itself, as we’ve seen recently in sports betting. Prediction markets are impressive generators and aggregators of information, and politics and policy are at least as valuable an application as sports. To go meta, suppose we want to know- will PredictIt survive past February? There’s a prediction market for that, and its currently saying they’ve got a 20% chance.

The NFT Market Is Mushrooming – Why??

Saturday Night Live fans were introduced to Non-Fungible Tokens (NFTs) a year ago with this skit. Most people know that an NFT is a digital ownership certificate of some asset. That could be a physical asset, or a purely digital asset, like a crude graphic of an ape wearing a sailor’s hat which people are willing to pay hundreds of thousands or millions of dollars for.

The NFT market volume exploded in the second half of 2021:

On-line chain transactions as tracked by DappRadar. Source: Schwab.

The global NFT market is projected to grow from $1.9 billion in 2021 to $5.1 billion by 2028, an annual growth rate of some 18%.

But, why??? Why would people plunk down millions of dollars for just a certificate of ownership of something which may not be particularly beautiful or functional? It is just not something that would ever occur to me.

Part of the answer must be that there are a lot of people who have a lot of money that they don’t really need. This may be a function of the ever-increasing income inequality, but we will not go down that rabbit hole. But still, assuming some 30-something has 50 grand that he doesn’t need  — why spend it on an NFT?

I did a real quick search on this topic. The most common reason appears to be the same reason many people buy rare coins or rare wines or other “collectibles” – they hope that someone else will pay them a higher price in the future. There also seems to be a sense of participating in some “community”, e.g., of Bored Ape Yacht Club aficionados. Much of it comes down to the psychology of what others will pay for something, which can be often explained in hindsight, but can be hard to predict if some asset class has not yet become “hot”.

It turns out that there are some other nuances to NFTs beside just hoping some “greater fool” will pay you more for the ownership of your ape drawing five years from now. I will conclude by pasting in some excerpts from an article on the Hyperglade blog, which frames the discussion partly in terms of the familiar economic concept of scarcity:

The key value proposition that NFTs often claim is scarcity. NFTs, as their name suggests, are each inherently unique on the blockchain, i.e. they can be attributed to a specific ‘hash’ or ID. But scarcity alone doesn’t drive value – it has to be a ‘scarcity’ that people want. 

One of the first types of scarcity that people want is exclusivity. Exclusivity in this context means something that is very rare and has attributes of originality. Long before NFTs existed, collectibles took center stage in this arena. For example, trading cards, comic books, and antique toys were very valuable due to their scarcity and history associated with them. For example, the Captain America Comics No. 1, from 1941 sold for over $3 million! The NFT equivalent of this would be Jack Dorsey’s first tweet, which went for $2.9 million. Jack’s tweet illustrates the quintessential NFT qualities; distinct historical moment, a special creator, and only one of them. 

Collectible NFTs come in many forms (in image, audio, or video formats), but the primary category is art (e.g. the Beeple NFT), followed by music, and sports moments (e.g. NBA top shot). Subsequently, given the depth of the cultural penetration of the content involved, collectibles are the most popular reason for investing in NFTs. According to Crypto.com’s NFT survey of ~30,000 polled users, 47% of those who own NFTs bought them for collectible value. Their primary motive – to be able to ‘flip’ (sell) at a higher price.

Access to a Network

More recently however, is the emergence of NFT collections that empower communities. These collections give holders access to special privileges, primarily access to special cryptocurrency related services and benefits (e.g. higher investment rates). For example, The famous Bored Ape Yacht club holders get to attend special events, E.g. in October 2021, members celebrated annual Ape Fest in New York City, Bright Moments Gallery.

Assets in virtual worlds and gaming

If you haven’t heard of them already, Virtual digital worlds are computer-simulated environments in which users roam around using their personal avatars. So NFTs neatly solve the problem of immutable land ownership. And depending on the demand, access and foot-traffic to certain places in these simulated world prices for virtual lands have skyrocketed. For example, even the cheapest land in decentraland exceeds $10,000. In a very similar way, web 3.0 games are expanding the use case by digitizing in-game assets so that they can be physically owned by players on the blockchain. In-game assets can include characters, cards, skins, etc. a list of which you can find here.

Raspberry Pi 400 Review: A $100 Desktop PC?

The Raspberry Pi 400 is billed as a complete desktop PC for under $100 ($99.99). Is this for real, considering the cheapest regular computers are around $300 (plus paying for Word and Excel)? Your intrepid correspondent here dives deep to bring you the truth.

The Raspberry Pi series of microcomputer have been around since 2011. A typical  Raspberry Pi is a printed circuit board, about 3 inches by 5 inches, with  a microprocessor chip, some RAM memory, and many input/output  ports. These ports include four USB ports, two micro-HDMI monitor ports, an Ethernet LAN port, a 3.5 mm audio/visual jack, and special camera-related ports (which can also handle a touchscreen). Also, a port for a micro-SD memory card, which is where the operating system and apps and data reside. But wait, there’s more: in addition to Bluetooth and wi-fi capability, the Pi has a 40-pin port for input and output to interact with the physical world.   All this for around $35! [1]

Raspberry Pi Model 4 B

Developed by the British nonprofit Raspberry Pi Foundation as an affordable educational tool,  millions of Raspberry Pi units have been purchased by students and techies to learn-as-you-play and to do some useful projects. I have been aware of these devices for years, but I have been put off by how many peripherals you have to add to get an actual working unit – you have to add a USB-C type power supply, a keyboard, a mouse, and a monitor or other display. And you have to make or buy a case to put the circuit board in. All of which seems like a sprawling mess of wires and stuff. Also, the Pi does not have the computing power and memory to graciously run Windows and Microsoft Office apps like Word. Instead, it uses a Linux operating system instead of Windows, and LibreOffice apps for word processing and spreadsheets. I have never used Linux; it sounded exotic, maybe with a steep learning curve.   

However, the good folks at the  Raspberry Pi Foundation have come out with a new package for the Pi. This is the Raspberry Pi 400. The computing guts are housed inside a keyboard, with all the ports in the back. Thus, they provide the case and a keyboard, all in one tidy package, for about $70. The 400 lacks a few of the input/output ports found on the regular Pi, namely the camera-related I/O and the 3.5 mm headphone/video jack, but retains the 40-pin I/O port.  For $100 you can get the complete Raspberry Pi 400 Personal Computer kit which includes a power supply, a mouse, a micro-SD card with operating software, a cable for the monitor, and a thick manual. I finally succumbed and bought the complete kit. [2]  (Tip:  To get the $100 price, you may do better to find a physical store location like Micro Center, since sellers on Amazon mark it way up to around $160, or sometimes they substitute the bare keyboard for the full kit). You just need to supply a monitor or a TV that has an HDMI input. [3]

Raspberry Pi 400 Personal Computer Kit

The User Experience

So, how good is the Raspberry Pi 400? I have been pleasantly surprised. First, there was almost no learning curve on using the operating system. The version of Linux that is on the microSD card and which gets booted into the working RAM has a very Windows-like visual interface. I did not have to type in any arcane commands. It was all obvious point and clicks to open apps and documents. It helps that this is a pretty simple system, so not a lot of choices to wade through.

I entered my LAN wi-fi password, and was immediately on the internet using the built-in generic Chrome (not Google Chrome) browser. With the recent, improved software on the Pi, it happily streamed YouTube videos, etc.  The LibreOffice suite includes apps which have most of the capabilities of Microsoft Office Word, Excel, and PowerPoint. You can configure some settings in LibreOffice to get the appearances, menus, etc., to even more closely match the Office apps. LibreOffice can save and open files in standard Office formats ( .docx, .xlsx, etc.) so as to share files with the rest of the world. This is pretty good for free software.

I’d rate the keyboard experience as “OK”. The keys are full size, but the feel and the keyboard angle are enough different from my laptop that my typing was slow. Maybe that would improve with use. If I were going to do a lot of typing on this, I would  prop it at a more horizontal angle and rest my wrists on a pad sitting in front of the keyboard, to replicate my hand position on my laptop.

I have not yet played around with the 40-pin I/O port on the Pi 400. That sets it apart from a regular PC, giving the user a means to read inputs from the physical world, analyze them, and output desired actions (e.g., operate the watering hoses in a greenhouse or garden, depending on temperature and dryness of the ground). There are zillions of plans available on line for projects controlled by Raspberry Pi’s. Some are practical, some involve robots, and some are just whimsical, like retro video games and like this sugar cube launcher, which measures the distance to a coffee cup and shoots a sugar cube through the air with a trajectory calculated to land it in the cup. And here are another 26 Awesome Uses for a Raspberry Pi , including stop-motion and time-lapse videos (may not work on Pi 400 because it lacks regular Raspberry camera interface) and turning your Raspberry into a Twitter bot or web server that can host your own blog site.

The Verdict: Is This a Real PC?

Would I recommend this as a primary computer? Well, maybe, for someone on an extreme budget or living in a low-income country, or for someone in a situation where their computer is liable to get lost or broken or stolen. After all, it can do practically anything that a regular PC can do (email, YouTube, word processing, etc.). One area it falls way short in is compute-intensive gaming, so it is not for you if you need realistic spatters on your screen for Call of Duty. Also, if you have to go out and buy a new $150 monitor to use it, the value proposition starts to fall apart, but usually you have an old monitor or TV  around or can borrow one from someone.

The LibreOffice apps will do most of what Microsoft Office does. The Pi cannot download Office and run it offline. However, if you can’t live without the authentic Microsoft Word experience, you can use the Pi as a terminal to log into Microsoft 365 and pay for and  run the Web version of Word, Excel, etc.  Also, you can plug in a USB microphone and USB webcam and use the Pi with Zoom.  

Here is a list of further recommended programs ( all open source, Linux compatible) to install on a Raspberry Pi. These include programs for photo editing, media streaming, gaming, and connecting to a VPN. Here are more tips on the Pi 400 for home office use, including printing and online collaboration tools.

So, yes, a Pi 400 can do most of what desktop PC does, all for $99.99 plus tax [4]. Not to mention not paying an extra $150 or so for Microsoft Office. That said, most of us already have a portable laptop as our primary computer. We can carry it anywhere, and it has built-in display, camera, and speakers. And we have a large monitor on our desk for the desktop experience. For most of us, it is worth spending say $600 for our laptop-plus-monitor versus using an underpowered desktop PC tethered to a monitor and power cord.

So, realistically, most adults in the West would not probably choose the Pi 400 as their primary computer. However, it is a great little spare machine to have around for guests or for kids or for if something happens to your main PC.  It can be a second PC on the corner of your desk to use while your main computer is tied up on a Zoom call. Multiple people (e.g. students in a classroom) can share a Pi, especially if each person has their own microSD card or USB to store their individual documents. You could use a Pi to stream music or video over some random speaker or monitor or TV or dedicate it to some similar specific purpose.

The software load includes Python, a popular programming language which may be worth learning. Also, the Linux  operating system is very widespread in the computer world, powering most servers, so it can be useful to learn Linux as well. Although the newbie user will likely just use the Windows-like graphical user interface, the command line text Linux commands are available for use and practice on the Pi. The Pi 400 software also includes “Scratch” (good tutorial here):

Scratch is an easy to use block-based visual programming software that can run on a Raspberry Pi. Using this tool, you will be able to create your very own animations, games, and more using a straightforward drag-and-drop interface. The Scratch software is a great way to get young people started with programming and develop a general interest in computing.

The Raspberry Pi is a powerful tool for interfacing with the physical world, in the “internet of things.”  A tech-inclined person (including a high school student) can find or invent a variety of fun and useful projects which make use of the input/output capabilities of the Pi. Since the internet can be problematic for kids, these sorts of projects with the Pi can keep them busy and learning on a real computer without necessarily having routine internet access.

Endnotes

[1] Some even cheaper, more stripped-down Raspberries have recently become available, such as the Pico and the Zero 2 W, to use as dedicated microprocessors for some specific application.

[2] I think one reason I got the Pi 400 was sheer nostalgia; my very first personal computer, purchased around 1985, was a Commodore 64. Like the Pi 400, the Commodore 64 was a low-cost keyboard with interface ports that you hooked up to a TV or monitor. I used the I/O port on the Commodore to control a Radio Shack robot arm, using relays on a printed circuit board that I etched myself. Good times.

[3] Normally, the sound output from the Pi 400 is transmitted to the monitor/TV along with the video in the HDMI.  If you have some old monitor or TV that only has VGA video input, you can buy an adapter cable that converts HDMI to VGA (make sure you specify male/female correctly), but that only gets you the visual output. To hear the sound in this case, you’d have to either pair up an external Bluetooth speaker with the Bluetooth in the Pi, or plug in a USB speaker. (The other Raspberry Pi models, like the 4 B, include a 3.5 mm jack that sends both sound and video, so you could just plug in a headphone and skip the USB speaker).

A couple of random tips on the Pi 400 keyboard: The Raspberry key, near lower left, brings up the main menu. To get a clean shutdown, properly saving and closing documents and apps, use  Fn F10. Another observation: You can run the Pi off a USB thumb drive instead of the micro-SD card, which can give faster performance and more storage.

[4] One learning I got from doing this review is that you could use your phone as a desktop PC: with an iPhone or iPad, for instance, you can drive an external monitor with a cable from the Lightning port, and use a Bluetooth keyboard/mouse for inputs. There are word processor and other apps that run on phones and tablets, including Microsoft Office. This should give a computing experience similar to that on a Raspberry Pi, although using iOS or Android-specific forms of the various apps.

Buying in Bulk: Money Saver or Self Sabotage?

Recently, I’ve been buying a lot more non-durable goods when they are on sale. Whereas previously I might have purchased the normal amount plus one or two units, now I’m buying like 3x or 4x the normal amount.

What initially led me here was the nagging thought that a 50%-off sale is a superb investment – especially if I was going to purchase a bunch eventually anyway. I like to think that I’m relatively dispassionate about investing and finances. But I realized that I wasn’t thinking that way about my groceries. The implication is that I’ve been living sub-optimally. And I can’t have that!

If someone told me that I could pay 50% more on my mortgage this month and get a full credit on my mortgage payment next month, then I would jump at the opportunity. That would be a 100% monthly return. Why not with groceries? Obviously, some groceries go bad. Produce will wilt, dairy will spoil, and the fridge space is limited. But what about non-perishables? This includes pantry items, toiletries, cleaning supplies, etc. 

Typically, there are two challenges for investing in inventory: 1) Will the discount now be adequate to compensate for the opportunity cost of resources over time? 2)  Is there are opportunity cost to the storage space?

For the moment, I will ignore challenge 2). On the relevant margins, my shelf will be full or empty. I’ve got excess capacity in my house that I can’t easily adjust it nor lend out. That leaves challenge 1) only.

First, the Too Simple Version.

Continue reading

EWED Recommends Gifts 2021

Economists know that holiday gift-giving is inefficient. However, if it’s going to happen anyway then we try to help on the margin with our personal recommendations. First, I will explain the products that writers liked this year, and then I will list the books. I thank the writers for participating in this exercise for a second time (see last year).

Not-Books

Jeremy made strong case for portable batteries that allow you to charge your electronics. As he said, you could be someone’s battery hero! This product would make a nice tidy box to wrap for an adult and it’s under $40. Are men hard to shop for?

For stocking stuffers, Zachary recommends a children’s music CD by Laurie Berkner. Your kid will start asking for something on repeat, so why not make sure it’s something good? Zachary also reminds us to consider nostalgic wrapped snack foods.

Scott gives two solid options that are affordable and small. A keychain light for adults and a spinner toy for kids. You can buy the plastic spinners in bulk and give them out to a whole family or neighborhood of kids at the same time. A more substantial adult gift would be a folding bicycle.

I recommended a pair of running shoes and, even though this might no longer be the “hot” gift, AirPods. Some people still don’t have AirPods, and it makes a tidy package. Or, maybe your teen lost one of their ear pieces over the last year?

James reminds us to order products ahead of time because of looming supply chain delays. He also suggests some internet paid subscriptions. If you don’t want to deliver a physical wrapped package, then buying someone a year-long subscription to one of these Substacks is a great idea.

Note that the tungsten cubes you are seeing in the news are not EWED-endorsed gifts.

Books

Jeremy highlights a brand new economics book, Career and Family, about the changes in women’s labor force participation throughout the 20th century.

Yesterday, I recommended Liberty Power about American abolitionists for adults and The Voyage of the Dawn Treader for school-aged kids (in which, also, a slave trade is abolished).

Scott recommends How the Irish Saved Civilization. For many people, Scott’s book is probably a safer choice than mine because its scope is wider. Liberty Power would make a great gift for someone who reads so much that they have already finished How the Irish Saved Civilization.

James has given us a few suggestions. For fun, Murder-Bears, Moonshine, and Mayhem: Strange Stories from the Bible to Leave You Amused, Bemused, and (Hopefully) Informed. James found 4 Hour Body and 4 Hour Chef to be useful.

As a final note, a lot of my professor friends are getting the Remarkable II as a paper-reading-writing tablet. It seems superior to an iPad or previous tablets. Some functionality requires an extra data plan subscription.

Joy Recommends Running Products

Late October is a nice time to get outside in Alabama. I have answered the primal call to suburban moms and signed up for a 5K running race at the end of the month. To make running practice safe and fun, I dropped a few hundred dollars this month on products.

Now that I’m old, my first concern is not injuring myself. Having good new shoes that absorbs some of the impact from running is important. I went to a local running store and ended up getting Asics Gel Nimbus.

I really like them. Amazon link. It seems like the price ($150) in the boutique store and the Asics website and Amazon is all the same.

Assuming you are not considering getting these shoes for yourself, do not buy a woman running shoes for Christmas, obviously, unless you’ve discussed it with her. You could buy a family member the other big purchase I made for running: AirPods.

Many people already have AirPods but I’ll review them anyway. I bet there are at least 10 people out there just like me who view them as newfangled and unnecessary.

My primary reason for getting them was so that I can listen to music while I run and not have the annoying headphones cord in my face. They are great for running. By the way, I got the cheapest version since I only use them occasionally.

AirPods are more than wireless headphones.  They are smart. They allow you to take hands free phone calls when your phone is two rooms away (which can be a reason to keep them in even when you are not listening to music). They respond to voice commands and prompt you on what to say. Maybe I shouldn’t be, but I was surprised by how easy it was to start using them.

I use a free application called RunKeeper. Without any fiddling from me, the AirPods give me useful feedback on my run from RunKeeper. I don’t have to stop the music or pull out my phone to get this feedback. It just knows, and the AI is correct about what I want to hear when.

While I was at the Apple store getting AirPods, I considered getting an Apple Watch. It turns out that the Apple Watch does not have a long range from the phone. So, I cannot run a mile away from my phone and still get all services on the Watch. Since I’m not a serious runner, I did not want to spend hundreds of dollars on a new watch plus pay for a separate cellular plan for the device. I run while holding my small-ish iPhone.

Apple Watch records your heart beat. I can be a privacy grump, even though I use a lot of tech. Apple Corp. can C it’s way right out of my vital signs. I don’t even want data on my heart rate and sleep patterns, for myself. I’m already mentally overloaded, so I don’t want more data to think about.

Here’s a song I like to put at the beginning of my running song playlist: https://www.youtube.com/watch?v=FxmkYugYu7Q

Lastly, for your holiday shopping list, I will make one plug for the shirts in our Blog Store. These make a fun gift for math majors or Econ Ph.D. folk.

Some Gear I Like: Keychain Light, Helicopter Spinner Toy, and Folding Bicycle

Here are three things that I would recommend as gifts, depending on circumstances. The first is a really small, really bright keychain light, the second is a very inexpensive (40 cents apiece) flying spinner, and the third is a bike that folds up.

Photon Keychain Flashlight

I like the tiny lights from PhotonLight.com. They are so small that they do not burden your keychain, but they are powerful and physically tough. Most models are waterproof, and let you change batteries if they wear out. Nowadays everyone has a cell phone with a built-in light, but there are times when I am not actually carrying my phone (I know that may be hard for some readers to conceive of) and I need a flashlight function. If I pull out my keys to use in a dark situation, it is helpful to be able to just feel this little guy on my keychain and squeeze it, rather than pulling out my phone and manipulating that to get a light. I encourage other family members to use these little lights as a safety item.

The base model is the MicroLight I ($7.95):

This one you just squeeze to make it light up. That is perfect it you only need the light for a few seconds at a time. The MicroLight II ($11.95) adds a tiny slider on/off switch, so you can turn it on for minutes at a time, like a regular flashlight.

The Photon light model I carry is the Freedom light ($15.95). It has a number of modes you can access by squeezing for a couple of extra seconds. I put it in flashing light mode to get car drivers’ attention when I need to cross a busy road in our neighborhood. Photon sells a larger, rechargeable, very bright keychain light for $24.95.

Inexpensive Helicopter-Type Spinner Toy

Here is a fun kid toy which is really cheap per capita:

On Amazon it goes by the name of POPLAY Twisty Pull String Flying Saucers/Helicopters, 40 PCS.  Each set consists of a twisty stick, a helicopter spinner, and a little shover piece. You hold the stick in one hand, drop the collar-like shover piece down over it, then thread the spinner down the stick. To launch, hold the shover piece and lift quickly. It the spinner will reliably fly up 10-15 feet and then settle down. Kids can try to catch it on the way down.

For $15.99 you get 40 of these sets, which is 40 cents apiece (!!). So you can hand them out as party favors or whatever.

High Quality, Low-Priced Folding Columba Bicycles

I wanted to get a on-road/off-road bike that would not take up too much room in our townhouse, and that could fit in my Civic trunk. (I ditched my ancient previous bike when we moved a year ago, partly because it would have taken up too much room in our moving pod).

After a lot of roaming the web, I found a vendor that offers direct from-China-to-you savings. (Nearly all bikes are made in China, so there is no getting around that).  2KSilver supplies a wide line of “Columba” brand folding bikes. The Columba name is probably a knockoff of the highly-regarded  “Columbia” brand, but in fact the Columba bikes seem to be solid, middle-grade machines with Shimano derailleurs.   

I eyed their line-up of 20-inch wheel folding bikes, like this one ($250 plus shipping):

It weighs only 27 pounds (  kg) and folds down to 31″x14″x25″. People sometimes take a bike like this on the train for commuting; they can ride to the train station, then ride from the station in town to their office. The 20” Columba bikes look fine for that application, but with the small wheels and the 7-speed gearing only on the back wheel, the internet opinion is that this sort of bike would get tiresome riding long distances or off-road. It might make a good mid-sized children’s bike.

I ended up getting an alloy-framed bike with 26” tires and 18 speeds, for $310 plus shipping:

I have been really happy with it. The tires and gearing are perfect for my casual on/off road use (moderate-length road trips or dirt/gravel trails; not 100-mile marathons or extreme mountain biking). It has shock absorbers in the front fork and below the seat. The frame folds in half, and the seat post and handlebar assembly pop out quickly to make a package that will fit in a cloth bag. But it is a good machine at a good price even if you don’t care about compact storage.

One touch I appreciated about the web site is that (unlike some sites) they were realistic about the comfort level for tall riders. I bought the recommended longer seat post, so my legs are not crunched. They used to offer an extended handlebar stem so you are not so hunched over while riding. That seems to be out of stock, so I bought some “Bar Ends” that attach to the ends of the handlebars and stick up a couple of inches. For a younger teen or for shorter men or most women, these accessories would probably not be needed.

The seat that came with this bike was a perfectly fine, standard narrow seat. However, I find it painful to have my weight on those little “sit” bones like you are supposed to. So I ended up getting a big fat padded Bikeroo bike seat, and then putting a gel seat pad on top of that, for luxurious sitting comfort.

Bottom line: If you are in the market for a general-purpose bike for you or a family member, I’d recommend looking at the bikes available on the 2KSilver site.

Streaming Content: Scattering Vs Dumping

Like a good millennial, I don’t have cable. Instead I have Netflix, Amazon, Hulu, Disney+, YouTube, and a free trial of Apple TV. And before you say that I’m spending just as much as I would have spent on cable, just – no. First, I am not. Second, I have way more capability and discretion than I ever had with cable. Each of these streaming services now has their own studio(s) and competition is causing them to produce some content of exceptional quality. And, they differ in their decisions to scatter vs dump. Amazon and Apple TV scatter their new episodes on a weekly schedule. You can still watch the episodes whenever your heart desires once they’re released. But if you are up-to-date, then you must wait 7 days until new episodes are available. Netflix, on the other hand, dumps out a new series all at once. You can spend the afternoon (or morning, or night) watching an entire season of the newest content from a high-end studio.

If we take a look through the way-way-back machine, then we can observe must-see-TV on NBC in the 1990s. Networks followed the scattering model. Most people didn’t own a DVR and on demand wasn’t really a thing except for pay-per-view. VCR (video cassette recorders) were ubiquitous, but people enjoyed watching their shows as they were released rather than later watching a recording. The 90s and early 00s were a special time for NBC in particular: Friends, Seinfeld, Frasier, 3rd Rock from the Sun, and ER were all a part of the weekly line-up – with Will & Grace and Scrubs soon following the finale of Seinfeld.

New weekly episodes that were released during a literal ‘season’ of the year had been the model for as long as television signals had been broadcasted. Several of today’s streaming services still adhere to the 80-year-old practice.

Why?

I’ve got 3 reasons for why streaming services still scatter new releases. The first is the one I that have the least to say about: Buzz. It’s good marketing for a show to be released over a longer period of time. In a world of social media, the longer the time that a show is salient in your life, the greater the opportunity for you to share the show with your friends or for critics to acclaim (or pan, as the case may be). It’s a marketing tactic. If all of the episodes in a season were released all at once, then a show would be in-and-out of your life like a stray ice cube that goes rogue from the refrigerator ice-dispenser. You care for a bit. But soon, it’ll evaporate and never be a concern again. I’m not an expert in marketing. So I’ll just leave it at that.

The second reason is due to the time value of money. The sooner that we can enjoy revenues and the later that we can push costs, the better. It’s true for multiple reasons. Financially, every day sooner that you receive a dollar is an additional day during which you can earn a return by investing it elsewhere. For ease, let’s hold the schedule of costs constant and just worry about the revenues. If a streaming service releases episodes weekly, then episodes can start dropping before the season finale is even completed. There’s nothing that says that the whole season has to be ready by the time the first episode is released.  And, when episodes are released earlier, would-be viewers are sooner willing to sign-up and become paying customers. Releasing episodes weekly allows a studio to increase revenues before the whole product has finished production.

The 3rd and final reason for streaming services to release on a weekly schedule is due to the subscription structure of marginal revenue. Streaming services earn *no* additional revenue per episode viewed by customers. The marginal revenue earned from paying customers comes from subscriptions. That is, each month of a subscription is revenue for the streaming service provider – no matter how many episodes a subscriber watches. Therefore, if a season is released piecemeal, then it increases the number of weeks during which the streaming service receives revenues from the customer. Of course, people could just wait until all of the episodes are released and then subscribe for a single weekend of lethargic binging. But that can only happen when a viewer is comfortable with forsaking the frontier of new video content. That would mean that a viewer is out of fashion and out of the conversation that their friends and co-workers are having. And if this sounds like small potatoes, then keep in mind that such conversations are often about signaling belonging, comradery, and cultural sophistication. Many people are inclined to stay up-to-date on TV, the news, and sports and therefore have a greater willingness to pay.

There you have it. The 3 reasons for streaming by scattering over weeks rather than dumping all at once are 1) More persistent saliency among viewers and potential viewers, 2) Sooner rather than delayed revenues, and 3) More periods for which streaming service can charge their customers for new content.

I only have one explanation for why some streaming services do in fact dump an entire season at once. Netflix does it on the regular and Amazon started doing it in the past several years too. I suspect that they do it as a means of attracting a particular market segment: binge-watchers. There being two players who compete on this margin may make either provider appear less attractive for consumers who desire new, binge-worthy content. But, luckily for Netflix, streaming content providers aren’t in a perfectly competitive market. That content is an imperfect substitute means that it’s monopolistically competitive. And, for the moment, that means higher profits. The keen reader will recognize, however, that zero long run economic profits are also implied.

Penny-Pinchers Gonna Pinch

Text books say that there are two major problems with the Consumer Price Index (CPI). First, accounting for changes in quality is difficult. Second, the CPI is calculated by assuming a fixed basket of goods is consumed over time. For both of these reasons, the rate of inflation that is implied by CPI is typically considered to be about 1% overestimated.

Imperfectly accounting for quality improvements causes higher measured inflation because the stream of services that a product creates for the consumer has increased – even though the product is nominally the same product. For example, the camera on my smart-phone is now good enough to record a high-quality Youtube video, whereas it was of mediocre quality on my previous phone.  My life is better-off with the better camera. But the increase in my quality of life isn’t measured by the CPI. The CPI does, however, make note that I paid a higher price for a phone.

Further, people don’t consume a fixed basket of goods over time. Even if we stopped the introduction of all new products and maintained the quality of all current products, people would still change the composition of their consumption due to price changes among related goods.

When people get hot and bothered by inflation, they often appeal to people who are of less means and who would find higher prices more burdensome. For that reason, below is a graph of some calorically dense and roughly comparable food staple prices (from the PPI).  You can put a protein on top of any one of these and call it a meal: pasta, flour, potatoes, & rice.

Let’s say that a consumer consumed equal parts of these in January of 2020. The CPI assumes that the consumption basket remains constant and plots a weighted average. In such a case, price rose 2.3% through July 2021. But in real life, penny-pinchers gonna pinch. If our consumer is particularly Spartan, then he will always consume the cheapest option – he treats the different foods as perfect substitutes. The Spartan price of consuming *fell* 22.3%. To be clear, the CPI assumes that the consumption composition remains unchanged, while the consumer’s actual basket is responsive to price changes.  Even if a consumer considers these goods to be imperfect substitutes and is willing to cut any particular type of consumption in half in favor of the cheapest alternative, then the price fell by 10%. In fact, a consumer who is at all responsive to prices will always have a cheaper basket than the headline CPI, all else constant.

In conclusion, be careful with your money. Spend it well and seek out alternatives. Your flexibility determines how much money you’ll have at the end of the month. The headline CPI number impacts only the most passive consumer – and even then, budget constraints gonna constrain.

Air Fryer: Redundant, Self-Indulgent Counter-Space-Waster?

While we were all imprisoned at home in 2020, we turned to eating food, and preparing food to eat in order to occupy and comfort ourselves. People baked bread for the first time in their lives. When yeast in the stores ran out, the internet was alive with tips on how to get sourdough cultures started. And a lot of air fryers were marketed and bought.

The premise of air fryers seems unassailable: quickly circulate very hot air (up to 450 F/230 C) to get that delicious fried crispiness with minimal oil, and get it in minutes with minimal fuss and cleanup. Since we had an offer of getting an air fryer at a discount, I consulted my wise friend, the internet. I wanted to love air fryers, but it seems they don’t cook much differently than a modern countertop convection toaster/oven (“turbo broiler”). There are some space-age-looking air fryers with a more slender, curvaceous profile which has a somewhat smaller footprint than a rectangular turbo broiler, but the capacity is typically only enough for one person or a couple with modest appetites.

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