What does free mean?

I don't have very many, but the ios/droid app marketplace is interesting with all the free apps.  I find myself hesitating to pay money for an app, even though having it would be quite useful and I get that the person who wrote it is trying to make a living.  I'll drop $2 on a cup of coffee, but resist paying 99 cents for a app I know I'll use?

The I saw this article about trying to monetize blogging and was taken by this quote:

If you are not paying for it, you’re not the customer; you’re the product being sold.

 Interesting thought now when loading a free app.  Do you wonder who is buying you?

Football math

UConn surprised everyone for a fourth-down conversion late in the game against Pittsburgh.  Here's the math for doing this more in football.

Graphs can say one thing, or another

First, I am not posting this to make any statement about Paul Krugman, or anything like that.  But when comparing time series data, choosing the starting point can be more imporant than it seems, as this blogger demonstrates.  You could imagine investing strategies being compared in a similar fashion.  One graph shows strategy A is better, but with the same data and a different start date, another graph would show that strategy B is better. 

Another issue is the choice of the other data sets - they can also be chosen to look "fair" but those time series contain special features that make the analysis less than fair.  For example, compare company X with specially chosen company Y, because of the special charges for Y in a particular quarter make some observation about X seem more true.

Simple comparisons are not always so simple.

Subprime mortgages and CDS

Here is an interesting interview with Michael Lewis about the financial meltdown.  Part of it has to do with how so many people made so many dumb mistakes.  I hope this makes people more skeptical of their decisions, and do a bit more analysis and think about how it could go wrong.

Financial collapse

First, know that I am not especially savvy about financial instruments. I sort of understand puts and calls, but not some of the financial instruments that are all over the news. And you can read lots of articles from people who think these people or those people are responsible for the mess. And some that civilization is coming to an end in deflation or hyperinflation.

Second, know that I am not a stockholder in JPMorgan Chase, although I do have one of their credit cards.

But I read this (long) letter from the CEO of JPMorgan Chase to his shareholders and came away feeling like it was one of the more honest assessments I've read in a while. The part that interested me starts on page nine. I think I will come back to it in a year or two and see how Mr. Dimon's analysis has held up.

Dilbert economics and a decision tree

Scott Adams has an interesting blog where he tries to reason his way through some of the issues of the day (a bit more seriously than in his cartoons). He has been blogging about all of the decisions associated with building his new house, and one of the big decisions is whether or not to use solar power.

Here is a post where he recognizes that the usual analysis (decision) about solar is just a choice of yes or no. This sounds okay, because you're in the middle of building the house and have to make a decision, right?

Well, there's another branch that people often overlook - wait and retrofit solar later. Nice observation, especially since that branch may be the best one.

I also can't help but smile when I read the summary:

My new home will have solar power. It was a city requirement. I plan to brag about it to people who are passionate about the environment and bad at math.

Sometimes a really smart person talks about things

Ok, so there's lots of blogging and arguing and anxiety about health care. Most of what I read is relatively unhelpful, and some of it is downright misleading. I don't know whether the mis-leaders are doing it on purpose or not (they might not know either).

Dean Kamen, on the other hand, is a pretty smart guy. I think you'll have a different appreciation for the debate after reading this Popular Mechanics piece.

Maybe some economic modeling next time first?

Here's a good quiz. I thought of another, operations version:

You're the gate agent for Delta and the flight is overbooked by two people. You announce in the gate area that anyone who wants to take a later flight should get in line. You'll give everyone who volunteers a $1000 voucher for future travel on Delta. After you've given four vouchers, and you realize there are ten people still in line, do you call you boss to see if you can continue to give out vouchers? Or do you realize you probably should have offered $100 vouchers?

Just wondering.

Markets and medicine

There isn't a magic solution, but I do think that markets would help in bringing down medical costs. If I have insurance and can go to a doctor for free (no co-pay insurance from my company) or stop by the Minute Clinic and see someone who can give me the same care (or send me to the doctor if they are not sure) but I have to pay $20, I know I'll choose the doctor. Even though I know the social costs are much, much higher, and that by going to the doctor, I'm making it harder for the Minute Clinic to stay in business and reduce health care costs.

But the idea that someone can decide all this stuff for me, so I don't have to think about it, or worry that I made a mistake and chose the wrong thing, is pretty appealing to many (me?). So I understand the appeal of centralizing the process, either with an insurance company bureaucracy or the intervention of some government. But I also know that centralization can never work very well (information economics) and will stifle innovation (a hard to determine but real cost).

Here's a reasonable article arguing for the market solution. But I think there is a way to explain this even more simply and convincingly. I hope someone tries.

Supply and demand

Now, please understand that I am not a geologist and have no expertise about drilling for oil. But I do understand that when the price of something goes up, one of two amazing things happen (or a mixture of the two): demand goes down, or people find a way to supply more.

It hurts to fill up the car with gas these days, but here are two independent stories that are different from the usual gloom and doom we read everyday: oil field development in North Dakota and the Falkland Islands.

Subprime mortgage mess

Ok, you have to be warned that there's a bit of less-than-polite language, but this is an interesting explanation of the subprime mortgage mess. I'm sure there was also some sophisticated modeling involved that, unfortunately, depended on an assumption that gets mentioned in the link. That assumption is not holding, and so the modeling has not played out as expected.

Hal Varian

Hal Varian is a very smart guy who was at UC Berkely and is now at Google. Here's an interview in the NY Times, and an earlier one in the Wall Street Journal. Good reading and some good advice.

Small Italian firms go global

Story about a small (50 employees) Italian company that makes dresses, but sells them around the world. Going global was the only way for the company to stay in business, because the number of local customers willing to pay for the quality and detail work of their dresses would not have been large enough for the company to stay in business.

Next time you see a website for a company (especially one that does very specialized products), think about how many employees there might be at that "global" company.

Microsoft and Yahoo

Interesting article in the NYTimes about Microsoft's offer for Yahoo. Seems to me that Microsoft is trying to sort out what business it is in in the long run, especially with the advent of open source software and on-line tools (Google docs anyone?). The Yahoo strategy seems to indicate that Microsoft is betting that computing is becoming Web 2.0 enabled (rather than driven by software loaded onto your computer). As a thought exercise, consider the minimum amount of software you would need on your computer to do most (all?) of your work. BTW, is this the market that the Apple Air is targeting? If you have everything on the web, a DVD drive and lots of USB ports aren't as important, eh?

I had not thought about the SAP strategy before reading the article, but that provides a completely different strategy, where in fact Microsoft products (Office, Outlook, etc) continue to be purchased because of their integration with the software that drives enterprises. Individuals use Office-like tools and web based email, but Microsoft stops thinking of them as their customers.

What are the margins in these two businesses? This strikes me as a very interesting case study: the company knows the current business model is not sustainable and has two very viable ways to reinvent itself. Which does it choose and how does it decide?

Wikipedia

How many people actually contribute to wikipedia? Do they contribute a little or a lot? Here is an article about some research into how democratic collaborative sites like wikipedia and digg are.