Why beautiful Dutch Ladies Bikes should come with a health warning

A bicycle is an experience good. A lot like a bottle of wine or a book, it’s hard to determine the quality of it before you consume it, so you can easily fall into the trap of buying the wrong one.

It is an easy mistake to make for anyone, but I’d like to focus on women tempted into buying “Dutch bikes.”

I’ve ridden the men’s version of the above, and it was a pig of a thing. 0/10, would not ride again.

People buy Dutch bikes because in the shop, the sitting position seems very important – you seem to be choosing between “hunched over the handlebars” or “sitting up comfortably,” between “sporty” and “relaxed.” 

I once went with my mum to buy a bike. She bought a heavy, upright bike and it is almost never used. She still rides though – it is just more likely to be on an old mountain bike.

In the real world, the discomfort of bicycling is – for a healthy person – much less about your body position, and far more about the effort expended. 

This is extra relevant if you imagine doing some cycling for transport, not just leisure.

If you are sitting up comfortably on a 20kg bike, you will be going more slowly in almost all circumstances. If riding to work will take 5 minutes longer than the train, it’s unlikely to be your go-to choice when you are stressed in the morning.

You are also exerting yourself for longer. You will be exposed to a higher chance of getting caught in the rain, more tired and more likely to be drenched in sweat when you arrive.

Exertion and time are the real costs of cycling and the real reason bikes get left in the shed while their owners drive. Yet people who imagine themselves as “not sporty” are the most likely to buy heavy, hard-to-ride bikes!

Dutch bikes are slower because of extra weight (this “lifestyle transport bike for ladies” weighs 21.4kg), and the upright sitting position.

The unfit will be likely to be in the steep and tricky part of this graph at moderate power wattages

The unfit could be in the steep and tricky part of this graph at quite moderate wattages

Extra weight becomes important on an uphill. Up a 7 per cent gradient, an extra 2.5kg will mean travelling about 2.5 per cent slower. Alternatively, trying to keep up requires more power output, and power output becomes exponentially harder to maintain (see graph).

The effect of sitting up straight is to create drag. Drag increases with speed, so a more aerodynamic position is more important when you would like to go fast. Not so important when idling along the shops or a busy off-road bikepath, but relevant on a long straight road, or when other cyclists are going fast.

Melbourne is not Amsterdam. It is undulating, in places downright hilly, and the other cyclists are not meandering along. If you find yourself pushing your bike uphill and getting overtaken, of course you will give up riding it.

I know women who cycle a lot for transport, and they have this in common – no Dutch bikes. Even this enthusiast sold hers after complaining about the weight.

If we observe actual women cycling, in the wild, we see what kind of bikes actually get used

DSC_0094 actual women cycling

What we (mainly) see is this: flat bars, baskets and aluminium tubing. Bikes that weigh perhaps 12kg, not 20kg. Bikes that won’t make it into a shop’s window display but should be celebrated and promoted.

Other experience goods often have independent quality ratings that provide some sort of indication of what you’re getting. You might look for a Booker Prize shortlisted book, or a wine that has won a lot of medals.

So I’d like to contribute an endorsement for light and practical women’s bikes. What Dutch bikes need is an equal but opposite thing. A big red sticker on them that says: “Warning. Will gather dust.”

How small is too small for an apartment?

A law against little homes? 

The Victorian Government is considering a new rule that would mean apartments have to be bigger than 37 square metres, or bigger than 50 square metres if they have a separate bedroom.

Why would we do it, especially when tiny homes are in huge demand?

I went to look at this little flat in East Melbourne a while ago. A bedsit in a nice location, in a beautiful building, with about 35 square metres of floorspace.

east melbourne flat

It turned out to be mouldy and squalid, and then sold for $370,00. But I would have happily lived in that much space if properly appointed (although not at that price!).

Is there inherently anything undignified about having one room that operates as bedroom, kitchen and lounge room? It is doubtless less comfortable, but I suspect that it is also true of driving a Barina rather than a Range Rover.

In fact, housing should probably be less regulated than cars. You can’t crash a house into someone else. 

These brand new places in Fitzroy look like they clock in very small indeed, and they’re apparently selling, starting at around $300k.

fontaine

The fact of the matter is that small homes may suit many people best, for any number of reasons.

People might feel cosier and more secure in a small house. People physically unable or mentally indisposed to do housework may love them. Environmentalists may choose them because they require less energy to light and heat. 

Certainly the single-person household is on the rise in a major way – up to 24 per cent of households from less than 20 per cent 15 years ago. So why would we regulate against small homes?

Part of the reason might be the psychology of decision makers.

People who make laws tend to live in large and charming detached houses. They wouldn’t want to live in a tiny little home. So they imagine they are helping the unfortunate by making sure homes are not small.

Politicians do not tend to live in the following: caravans, boarding houses, cars or under bridges. Lawmakers may struggle to empathise with those people, for whom a real home is a lifelong ambition they may never achieve because it is too expensive.

Very small studio apartments help make housing more affordable in two ways.

Not only do they cost less than a one bedroom house – which could be significant on its own – but they also allow for developers to put more homes on the same space, which increases the potential housing supply.

The worst thing you can say about a “too small” apartment is that they will be hard to sell. That the market for them will be small. That is equally true of a 20 bedroom mansion, and the same logic will apply – drop the price. 

If in ten years they prove unpopular, that will actually provide relatively cheap homes near the city, for a small group of people who would otherwise be shut out. I could only support such a policy.

Inflation has gone up: that is bad news, and I don’t just mean because prices are higher.

Prices rose by 3 per cent on average in the last year, their highest rate of change for several years.

Inflation

The RBA wants inflation to be between 2 per cent and 3 per cent. If inflation gets above 3 per cent, it will generally lift the official cash interest rate to keep inflation down. [for a nice simple explainer on how and why the RBA does what it does, follow this link.]

Inflation and interest rates

Higher interest rates make it harder to do business. If the RBA lifts interest rates now, while unemployment is at its highest level in years, the improvement in the labour market might slow down.

unemployment

Basically, the RBA is in a pickle. It is an “inflation-targeting” bank. Our entire economy hinges on the idea that lower interest rates create both growth and inflation. If they only create inflation, then we are stuffed.

It nervously awaits the next release of inflation data (in 3 months time) and the next release of unemployment data (on August 7th). We should all be on the edge of our seats.

n.b. the fact that the red line is below the blue line in the graph above means we have negative real official interest rates! The fact that money is losing value should be enough to get people spending it.

 

 

Israel’s response could be so much better

There is a lot to be disappointed about in the current conflagration between Israel and Palestine.

The world is getting more peaceful every year, but that little area around the Dead Sea remains a hotbed of conflict and violence. Since long before I was born, there has been conflict there. Is there any way to make it stop?

I’m not a foreign policy expert, I’m not theist in any way, and I’ve never been to the middle east.

But I am trained as an economist and I’ve done a lot of reading on Game Theory. And it suggests to me the response of Israel to Hamas rockets is probably far from optimal.

Rocket attacks are not a brilliant strategic move by Hamas. They are motivated by anger. And the more Israel looks like a bully that willingly kills civilians, the angrier Gazans will get.

Equally, military force deployed by Israel is disproportionate, strategically unsound and seemingly driven by anger.

The killing of children kicked off this escalation. Strategic thinking has evidently played little part so far. But it will be required to end the violence.

When the death toll in a “war” stands at over 500 to 20 (Reuters, 21 July), it is clear one side is doing more than the other. It might be imagined that the higher the willingness of Israel to be really aggressive, the faster Hamas learns to stop firing rockets. But that’s not what the theory says.

TIT-FOR-TAT

Time and again, proportional responses have been shown to be winning strategies in game theory situations. Pitted against many highly computationally complex theories, a strategy of tit-for-tat developed by Robert Axelrod has proven to be a winner in producing cooperation.   

In this instance, each rocket attack could be defined as the move of a player, and met with proportional responses, rather than much larger missile attacks and a ground offensive.

The downside from Israeli government’s perspective is that it would be perceived as the government valuing Palestinian lives as much as their own.

Tit-for-tat has its critics. An undeniable problem with tit-for-tat in the real world is distinguishing and agreeing on whose “turn” it is, although such a problem may be soluble by a formal announcement that reciprocity in any 24 hour period depends on the outcomes in the preceding 24 hour period.

GRIT

Another approach backed by Game Theory, is called Graduated Reciprocation in Tension Reduction. It was developed in the 1960s as a way to address the Cold War and is optimised for breaking a stalemate. It involves one side announcing it will make a unilateral move to reduce tension, and then inviting the other side to respond.

“GRIT may have a greater effect on changing the “enemy images” that fuel conflict since it uses unsolicited gestures to signal a willingness to pursue common interests to an adversary who has heretofore seen the conflict in zero-sum terms. Nevertheless, GRIT also has shortcomings that need to be taken into account. In particular, the work of Lee Ross on “reactive devaluation” strongly suggests that the mere act of offering a concession decreases its perceived value in the eyes of the recipient (Ross, 1995; Ross & Ward, 1995).” source

De-escalation by one side is the only way for the conflict to return from boiling to simmering. I place the responsibility for making the first move to stop this “war” at the feet of Israel.

Some might argue that is unfair. But with the kind of moves Israel has made, Hamas lacks the capacity to play tit-for-tat. How could it mount a ground invasion? While Israel is a nuclear armed power, Gaza is not even a state, Hamas fighters are not real soldiers, and who knows how effective the chain of command is. The side that has an international reputation is Israel.

— 

CODA / COUNTER-POINT

Israel may be investing in its reputation for being hard, rather than being irrational.

If a change in global polarity is coming, driven by the rise of China, Israel may perceive a need to be ready.

The US, may have a rival within decades. If China rises and forms an alliance with the oil-producing states that lie a short pipe-line away from its western border, the strategic imperatives for the US of supporting Israel may diminish.

Perhaps, in recognition of that, Israel has decided it will need to form a lasting peace within decades. If so it may be currently investing in a reputation of being mad and dangerous, in order to maximise concessions in that peace.

E-tax: How putting an accountant out of work can make the world a better place

This year, I started using e-tax again.

The last few years I paid an accountant to do my taxes, partly because there was no e-tax for Mac, and partly because I perceived  there would be some great benefit of getting a professional involved.

Having now been on both sides it’s time to announce my conclusion.

E-tax is, for me, a million times quicker, easier and cheaper than using an accountant. (Even though last tax year my affairs were more complicated than ever, having an ABN and business income, a redundancy payment, etc to contend with).

All the information the accountant uses is provided by me – why not just enter it into a system myself? My accountant also bothered me with physical pieces of paper (ugh!) that I had to physically sign (so medieval!). Using an accountant also gave me no hard deadline on doing my taxes – unlike e-tax – so I let it hang over my head til the following May.

When I go to e-tax, the suburban accounting industry takes a hit. They used to make a few hundreds bucks a year from me ($451 last year, I think) but now they make nothing. Doubtless, this hurts.

But this is exactly how productivity increases – painfully. When I find a way to do something more cheaply, it means someone loses a revenue stream.

The money I used to send to the accountants, I can now spend in some other way. It might go on travel, a new bicycle or dinner out at a restaurant. Some other industry will see the upside of this efficiency increase.

The story of the accountant being pushed out of work by a computer program is extremely relevant right now.

“We are now in the second machine age where robots take on mental, as well as physical work, which does encroach on a vast number of jobs” - Erik Brynjolfsson, director at MIT Initiative on the Digital Economy.

Big names are sounding out the warning:

“Software substitution, whether it’s for drivers or waiters or nurses … it’s progressing. … Technology over time will reduce demand for jobs, particularly at the lower end of skill set. … 20 years from now, labour demand for lots of skill sets will be substantially lower. I don’t think people have that in their mental model.” Bill Gates

In their mental model, the jobs are lost and not replaced. That defies centuries of progress. Could this time be different? I doubt it.

reaper

This guy (and many like him) were replaced by a single tractor

What will happen is that people will specialise in doing things only humans can do, or things where having a human do them adds great value.

These will mainly be services, but then we have a strong history in services.

We will not cease to be a social species, so there will be lots of instances in which people are prepared to pay a premium to have a human provide for them. You’ll notice the Sushi train has not yet replaced the waiter and the vending machine has not replaced the barkeeper.

What this means as well is that more and more jobs will be fun and challenging, because they are human-facing. There will be fewer book-keepers and widget makers squirrelled away in the back room never seeing another human.

Instead there will be more barbers, life coaches, counsellors, nail artists, masseurs, tailors, troubadors, baristas, chauffeurs, etc. And that’s only the existing jobs. I bet things you never thought a person could or would outsource will turn into huge industries.

I can imagine a cooking coach in people’s homes, to bridge the gap between eating in and out.  A financial adviser on call in all manner of situations – perhaps you can set up your credit card so you have to dial them up and justify your purchase every time you try to spend more than $100.

There could be cycling leaders who organise a great ride through the best terrain for the day, and make sure you’re not stranded without a spare tube. Experts that come to you to help you “homebrew” beer or make your own yoghurt. Interior designers that help you custom craft your own furniture. Cleaners that do lots of value add, by say, bringing flowers. Dog trainers, cat groomers, budgie psychologists?

Many of these already exist at small scale. The possibilities are limited only by human ingenuity and the human desire to consume. Don’t bet against those forces.

Game Theory: Why AFL journos are so chummy with football clubs

The Essendon drugs saga has revealed an awful truth about football journalism. Most sports reporters are sycophants who live in fear of upsetting footy clubs.

One journo revealed herself to be a shining exception, but she is just a speck in the bustling crowd that produces footy news.

Journalists hearing about the sacking of Melbourne coach Mark Neeld. Photo Source: Backpage Lead

Journalists hearing about the sacking of Melbourne coach Mark Neeld. 

[Photo Source: Backpage Lead]

The chumminess of journos and clubs can be shown in another way too – when the AFL launched its own, in-house news service, it actually compared quite well to the existing reporting. 

Compared to the way politicians and companies are treated, much football journalism is as tough as being stroked with a mink mitten.

For example, here’s a story that definitely did not come straight out of an AFL marketing department: Players Back Coach.

Here’s a great quote from that story:

“Mick has remained positive and very supportive of the players,” Yarran said. “Hopefully, he goes on. It is in the best interest of us if he stays. He has been fantastic for me and for the footy club.”

The reason for the sucking-up is access. There are nine Melbourne clubs and far more journos. The clubs offer players and coaches for interviews with favoured news outlets. And the longevity of the clubs is secure. 

How would this change if we had relegation?

In the UK, football journalists hold far more cards and have a far more antagonistic relationship with clubs in the Premier League.

That may be because a club does not hold all the cards. Three of the 20 teams are relegated out of the Premier League each year. The journalist knows that they can pursue a story about a club that will cause major damage to the club and the club can suffer so much it eventually disappears. It is not unlike the way a political reporter can hound a politician on a really big story that could end that politician’s career.

But in the AFL, if you hound a club on drugs or violence, sexism or a culture of persistent failure, they’ll be there next season, and the one after, and the one after. They are likely to last far longer than a football journo. Unlike politicians or even businesses, you can’t play a club off against another club – their survival does not depend on another’s failure.

Access is a – maybe even the – key resource which a good journo has. Game theory says that in an interaction that will be repeated every week, every season, for years to come, you are best to cooperate. 

About the only topic on which AFL journos will sometimes have a swing is coach performance. Is it any coincidence that coaches are hired and fired in the free market, and sometimes let go mid-season? I say no.

Etihad

Introducing relegation into AFL would dramatically change the nature of the game, and make the AFL’s job of equalising the league far far harder. I’m a fan of an even competition and I am not seriously suggesting relegation.

Another alternative would be to have sports reporters whose goal is to make it as journos, not just as football journalists.

They would not be afraid to dig dirt on a club if they know they have a two-year tenure as footy journos before they get moved onto state politics, courts reporting, or restaurant reviewing…

Your thoughts? Egregious examples of sycophantic sports reporting? Favourite worst reporters? Please leave a comment below.

Stem cells and self-driving cars: Why we look stupid predicting the technology of the future

We all know technology proceeds like greased lightning. In my lifetime, we’ve gone from typewriters to internet-enabled laptops. We’ve seen smartphones go berserk and enormous progress in survival rates for cancer.

Its tempting to predict more exponential change in the area you’re most excited by. Last night I watched a couple of documentaries on stem cell research that were mind-blowingly exciting (12). Want to see a paraplegic stand? Click on that first link.

But caution is needed.

The fields in which we see progress are affected by survival bias. We don’t see the frustrated scientists trying and failing to revolutionise other fields. Look around you and much is as it was 100 years ago. I’m sitting at a wooden chair at a wooden table, wearing woolen socks and leather shoes. The alphabet is the same as it was, and so is my keyboard layout. There’s a clock on the wall telling me the time with two rotating hands. I just got over a common cold. I’m eating brown rice and snowpeas. It could be 1850 – if not for the macbook.

Not everything is on the brink of revolution. Which is why I have to pull back on my former enthusiasm for autonomous cars.  I admit I was focused on the potential upsides - in traffic, in accidents, in parking, and on the successes Google has had with its autonomous car program. Google is backing the project, appointing the old head of Ford. But even Google fails sometimes, as with Google Wave.

“The benefits are so great that we will force ourselves to accept them, even with a few risks,” I told myself.

ship painting

But then I started thinking about the development path, and I became significantly cooler on the chances of success.

Autonomous cars will only break through once they are trusted. 

TRUST

Humans set a very high bar for situations where they perceive they are not in control. (That’s why people object to tiny risks of living downwind of a polluter but still drive fast.)  This means autonomous cars won’t just have to prove they are safer than humans at driving, but much safer – for car occupants, other road users, pedestrians, wildlife and pets. 

THE LONG TAIL

Computer operated cars are probably already better than humans at driving in car traffic on freeways and on busy roads. Humans are dreadful at mundane repetitive tasks that require paying attention.

Computers could do this part.

Computers could do this part.

But car crashes can happen in odd moments.

This is where humans excel. We dominate computers at dealing with problems we never saw before.

Humans will remain best at dealing with things like:

  1. A big black garbage bag blows onto the road but we know we needn’t swerve as we can tell it is light by the way it moves.

  2. Kangaroos are on the side of the road so we better slow down because they often jump in front of the car.

  3. It’s Saturday afternoon, there’s just been a football match, some sort of fight is happening on the side of the road, and you know someone could easily step out into traffic as part of the brawl.

etc, etc.

Many serious crashes occur in scenarios that are in the long tail of distributions. Machine learning will not cover them all, so there will remain a few scenarios (I predict on the basis of statistics alone) in which autonomous cars continue to perform predictably worse than humans despite the best efforts of programmers.

RISKY LAUNCH

Other types of software can launch with “beta phases” where failure is embarrassing, but not catastrophic. But the testing that will have to happen before any minor scale traffic experiments involving autonomous cars will be enormous.

A few high-profile crashes will be enough to set a very high technical and legal bar for autonomous cars. The concept of surrendering ones life to a machine is a staple of science fiction because it irritates a real issue in human psychology – control.

MANY OPPORTUNITIES FOR SETBACK

It is not just technical. Political, road engineering, PR and software challenges will impede getting autonomous cars to the point where people trust them and forgive their mistakes.

For example, the FBI is opposed to driverless cars, according to a brand new report.

 

There’s a lot of fail points. I suspect one will resolve into the one big sticking point for a long time to come.

What role for motorbikes under this all autonomous future?

What role for motorbikes in this all autonomous future?

SUCCESS WON’T LOOK LIKE SUCCESS

Cars will continue to have more and more sensors and autonomous capabilities. But during this time, non-autonomous cars will continue to be sold.

Traffic will be mixed for at least the next 50 years. Some freeways and highways will perhaps be autonomous-only. But not places where there are pedestrians, bicycles, shops, parking, and of course traffic lights. So the benefits of full autonomy will not be realised for a very long time.

The upside of the failure of the fields about which we are most excited is that we might get blindsided by a revolution in a field where we didn’t expect any improvement. Nano technology, GM foods, high-speed trains, smell-o-vision: any of these could be the one in which a breakthrough happens that turns out incredibly positive.