Upfront Cost Disclosure

Greetings, homeowners.

If you're a regular reader, you'll already know that I have both an environmental and a capitalist streak in me. I don't think these two need be in eternal conflict; in fact today's post is going to outline a way in which we can encourage the adoption of green technologies without messing around with the marketplace.

Good Policy Assumes Laziness

First of all, let me fire a diffuse attack at all of the legislated incentives to get people to adopt new green technology. While legislated incentives can be better than nothing, often the incentives are not proportional to the environmental good done (e.g. giving a fixed tax rebate to cars purchased with better than a certain mileage - there's just a threshold and no proportionality), and almost always these bills can't and shouldn't be passed when the technology has only limited applicability. However, I think that there are potentially many diverse opportunities for incremental improvements that just can't be addressed by legislated incentives. Good policy should automatically reward where it should; good policy is lazy and future-proof.

Virtue should be Its Own Reward

In this post I'm going to outline a way to promote environmental benefits in a natural, non-legislative way. Specifically, we should require that the advertised price of goods reflect the total cost of ownership, and not just the sale price. For example, when buying a house, the only price you would be allowed to advertise should be the sum of the sale price and the forecast cost of 20 years of utilities in the house. This way, houses with the same listed price would be equally affordable, and there would be incentives to build houses that were greener. Let me slow down a bit to unpack all of these comments so that they make a little more sense.

I'm Lazy Too

How many of you have bought a house or rented an apartment without first calculating the expected utility bills? I have never requested past utility statements for any property I've rented, and I certainly haven't done any thorough analysis of properties I'm only marginally interested in. I think I'm pretty typical in my laziness too: while I might try to factor in energy efficiency, I don't have a clear idea as to how much a given setup will affect my bottom line.

Modern economists acknowledge that humans make decision (and big ones too) with imperfect information, which results in less-than-optimal buying decisions. The most common numeric piece of information people take into account when looking to buy a house or rent an apartment is its price; my idea is to fold utility costs into the price from the outset so that people can make a lazy but correct decision as to how much they would like to spend on a heated domicile.

Implementation

If I ruled the world, the list price for all houses would have to be the sale price plus 20 years of expected utilities costs, based on prior use records. (Aside: 20 years is a round figure on the order of the inflation-adjusted doubling time of money at prime rates, so if you were to invest this sum at the time of sale its simple interest could pay utilities from the interest essentially for ever. Perhaps 20 years is a little on the short side.) The sale price would be allowed to be advertised only as a line item in conjunction with the utilities cost and the total list price. Lying would be considered fraud.

Guessing the efficiency of a new building might be difficult, but it should be possible to use statistics to fine any construction company which consistently lowball's the heating estimates of the buildings they make.

The same idea could be applied to automobiles: add the cost of driving 50 000 city and 50 000 highway miles before getting the list price. (Aside: this will come out to around $10 000: enough to perhaps convince many people to buy newer, more fuel-efficient cars. Who would want a clunker when the list price is $11 200? We might be able to persuade car manufacturers to lobby for this idea since it would boost new car sales.)

Perhaps major appliances and computers should have a similar addition to advertised price, maybe also including the mean time until failure. At some point gizmos become too small for these advertising restrictions cease to make sense, but I don't know if this transition happens at the "toaster" level or the "microwave" level.

Lazily Greener Incentives

Consider the implications of my idea on builders and house maintainers. If you build a house that's more energy-efficient, its value to the seller will automatically be higher, since it competes with houses of the same list price. The 20-year cost of heating a poorly-insulated house in a cold climate can top $100 000*, so energy-efficient designs and materials could give a significant edge on the open market.

Moreover, if home buyers were to display a fraction of the eco-chic that Prius-cravers show, perhaps small 20-year heating cost stats would carry the same caché as slim cellphones. In any case, energy efficiency could be reducible to a dollar value, which is great for putting things into perspective.

Conclusions

Let me recap a few of the reasons why I think we should add use cost to sale price to determine the list price of automobiles, houses etc.

• It's the duty of the government to protect consumers from false advertising.
  
• Markets are more efficient when more information is used.
  
• It's easier to perform cost analyses once per item sold than once per potential sale.
  
• Green policy should provide continuous incentives to make better products, and these incentives should be proportional to the environmental good done.
  
• Legislated incentives are rigid, slow-to-implement, and fiscally inefficient.
  

In summary, let's get our policy into the adaptive 21st century by making the cost advertised closer to what the consumer is really going to pay.

*Friends of mine in Toronto rented a house with typical winter heating bills of $2000 per month, even though some of them opted to turn the heat down and sleep in arctic sleeping bags. I'm sure that if this heating were advertised in the listed rent they would have rented elsewhere. The 20-year heating cost for this Victorian behemoth would have been over a quarter-million bucks: a significant warning to any prospective home-buyer, and a burning incentive for the current owner to insulate better to protect the house's retail and rental value.

Where Would Gaia Tan?

Greetings, sun-worshipers.

Today's post in by request. A bronzed goddess I know who's recently traveled aboard a Caribbean cruise wanted to know if cruising takes more or less fuel than a transatlantic airplane trip to Europe. Here's my take.

Fuel Cost of Flying

According to this chart from Nova, a typical transatlantic flight aboard a 747-100 will consume 57.7 gallons of fuel per passenger, or 115.4 gallons round-trip. (I'm not sure why they include three significant figures; I'm sure the variation is at least a few percent.) Incidentally, if you could drive solo all the way to Europe you would burn about five times as much, so flying isn't that bad in terms of mileage relative to driving a car alone.

Fuel Cost of Cruising

On the other hand, taking a one-week Caribbean cruise will burn about 140 gallons of fuel per passenger. (Here I assumed fuel efficiency of about 20 feet per gallon on a modern cruise ship - inspired by the QE II's mileage of 29 feet per gallon; a cruising speed of 22 knots, 3500 passengers and 3 days of full-speed cruising of the 7 total days.) The per-capita mileage of a cruise is then about 13 miles per gallon: about the same as driving alone; perhaps a little worse.

Conclusion

A transatlantic flight and a one-week cruise consume about the same amount of fuel. You're not exactly doing Gaia a great favor by vacationing on either, but the occasional vacation isn't going to outweigh habitual energy usage either. If you have a 2-hour commute in your own car, you'd burn roughly 25 gallons per week, so cruising once a year isn't going to overwhelm your daily habits.

Who knows; maybe the next generation of cruisers will like fuel-saving tech like this too? (Personally I would love a nuclear cruise ship as much for its silence as for its eco-friendliness, but I don't think that's in the cards.)

Coöperative Democracy

Greetings, citizens.

Today I'm going to talk about ways in which we can improve democracy by changing the way in which we vote. Specifically I'm going to point out a few flaws in the widespread "plurality" system of voting, then I'm going to promote an alternative: approval voting.

What's Broken?

Before I go into my proposed changes, let me persuade you that there is room for improvement in the current system, especially vis-a-vis vote splitting. Vote splitting is what allowed the Nazi party to take power in Germany, and what let LePen into the final round of the 2002 French presidential elections. In both cases, the majority of the electorate detested the above ultra-conservatives, but since the right was united their total vote count was large enough to give them disproportional power.

A similar situation happened in the 2006 Canadian federal election, where only 36% of Canadians voted for the Conservatives, but since there is only one significant right wing party and there are three left-wing parties the Conservatives took power.

Problems with Plurality?

Vote-splitting is a problem in any democracy where the winner is determined by a plurality, or first-past-the-post system. Since the candidate with the most people voting for them is the one that wins, one of the most tragic ways to lose a pluralist election is to have many good politicians agree with you. I suppose in some ways the threat of splitting the vote might be a good thing in that it encourages politicians with similar platforms to amalgamate, fostering simplicity; but this small good in my opinion is outweighed by occasionally electing extremist governments which don't reflect the will of the people.

However, given that there are going to be a few maverick politicos who refuse to take up another's banner, the reasonable parts of the political spectrum will become crowded with egotists whose best chance at getting ahead is by sabotaging their fellows' images, and politicians adopting unreasonable views will enjoy unsplit votes and my be able to wield disproportionate power.

The poor voter's only recourse is to vote tactically: to give power to a lesser evil to defeat a greater evil. Such tactical voting systems result in meta-stable power structures with all the appeal of a prisoner's dilemma; let's look for something better.

Alternative 1: Approval Voting

My favorite alternative to a plurality system is approval voting. Under approval voting, each voter is given a list of checkboxes next to the names of each candidate. She checks off each candidate which meets her approval. The candidate with the highest approval rating wins the election.

Under this system, one can check just one box (if one approves of just one party), one can check a whole range of boxes corresponding to parties that are all compatible with the voter's views (perhaps along with a few one-issue parties to show support without throwing away a vote), or one can officially show disgust with the entire slate by leaving all boxes empty, indicating that the voter trusts none of the meager offerings this year.

Aside from solving the vote-splitting catastrophe, approval voting discourages mud-slinging among politicians, since discrediting others doesn't behoove politicians as much. Politicians can build platforms partially atop of one another: one could declare "my views are similar to the popular Mrs. X's (which are reasonable and well-considered), with the distinction that I would pander less to the unions than she" without fearing vote-splitting disaster. It would finally make reason and politics more miscible than oil and water: it would be a genuinely good strategy to adopt good policies regardless of "whose turf" they belong to.

It goes without saying that the two-party fiasco of the United States (which in my opinion has done harm by dividing the nation into tribes) could be instantaneously remedied by approval voting: if any new party could win power through good centrist policy with bipartisan support, I would expect a lot less extremism in American politics. Sane policy is awaiting your approval.

Alternative 2: Borda Count

Another vote-counting system is to allow each voter to rank each candidate, potentially letting unranked candidates tie for last. While this method seems appealing since it allows voters to give more information than even approval voting, it suffers from complexity and from odd consequences of tactical voting, as will be described.

Assume that, like any current ballot, a Borda-count ballot has a few big shot politicians and alongside a motley crew of amateurs. The tactical voter who wants to maximize her chosen big shot over the other predominant big shot will rank the former first and the latter last, filling in the middle positions with dimwits whom everyone knows won't get elected. The trouble is: I don't trust voters to rank the filler politicians randomly: perhaps there will be a tendency to rank the unknowns from #2 at the top of the page through #(n-1) at the bottom. This will mean whichever dimwit #1 at the top of the ballot (who will be ranked #2 by pretty much every tactical voter) will have a higher voting score than either of the two leading choices (who will get a roughly 50-50 split between first and last place from each tactical voter) and we'll elect only dimwits. That would be horrible!

Borda himself acknowledged the Borda count's vulnerability to tactical voting. From Wikipedia (so beware the source):

In response to the issue of strategic manipulation in the Borda count, M. de Borda said "My scheme is only intended for honest men".

Let me know if I'm wrong, but it seems to me that there's no advantage to voting tactically in an approval voting system: if you don't like a candidate, there's never an incentive to endorse her, and if you do, you should always endorse her. The only potential for failure might happen if a few "single-issue" parties (like the marijuana party) get more approval than any other; if this is the case thought than the leading parties clearly have missed the wishes of the electorate and deserve what's coming to them.

Conclusions

So far, my favorite system of vote counting is approval voting. It gives everybody an equal say, remedies vote-splitting, is invulnerable to tactical voters and encourages collaboration among politicians. Let's start adopting this simple yet powerful method for expressing one's political opinion, and let the reasonable, collaborative, centrist policy begin.

PS: More on Voting Systems

Alas, there is no one perfect method of voting which allows voters to express a nuanced set of preferences, and always elects the best candidate under any criterion. Mathematicians have thus gone berserk in their search for esoteric methods for determining who gets elected; each one is "optimal" for a given view of what should be. If you're interested in the diversity of vote counting systems out there, take a look at the following Wikipedia articles (I'm just amazed by how many there are):

• Vote counting system
• Approval voting
• Bloc voting
• Borda count
• Condorcet method
• Coombs' method
• Copeland's method
• Cumulative voting
• D'Hondt method
• Droop Quota
• Dynamically Distributed Democracy
• Election threshold
• Hare Quota
• Highest averages method
• Instant-runoff voting
• Kemeny-Young method
• Largest remainder method
• Party list
• Plurality voting
• Preferential voting
• Proportional approval voting
• Range voting
• Ranked pairs
• Sainte-Laguë method
• Schulze method
• Single Transferable Vote

Today's Oxymoron: Airport Security

Greetings, passengers.

Show of hands: how many of you out there feel safer due to the airport security measures which supposedly keep bombs off planes? If you raised your hand you must think both that there are plenty of terrorists who try to bring down planes, but that the security checkpoints are in general pretty good at keeping them out. In this post, I hope to disabuse you of both of these notions.

First of all let me vent a little. I'm sick and tired of people talking about terrorists in general terms. I hear it all the time: "terrorists look just like us," "terrorists think what bringing down planes is God's will," and other such phrases which imply that there are enough terrorists to lump them into a uniform seething pile of hatred.

In truth, there are very few terrorists in the United States. When was the last time you heard about a US plane hijacking? Terrorism just isn't a big enough threat to justify its looming shadow over the US psyche.

The 90% Hole in the Airport Security Net

Why am I so sure that there aren't dozens of annual attempts at bringing down planes which we don't hear about due to the covert actions of TSA officials who anonymously shield us? It turns out security is regularly audited by undercover teams of agents who try to smuggle bomb-like devices aboard planes, and they succeeded in about 90% of post-September 11 2001 attempts, as reported here.

The take-home message is that the world doesn't hate us as much as militant politicians want us to believe. If about 90% of attempted plane bombings would be successful and yet US passenger planes don't regularly explode, we're left with no other conclusion than airline terrorism is exceedingly rare. If there's been one take-off for every 5 seconds since September 11, that's more than 30 million terrorism-free flights.

Conclusions

We're safe in the air, not because of an army of screeners, but because people don't hate Americans as much as we're told. Now, dear readers, could you let me know if you think our paranoia over plane bombing is just garden-variety misplaced fear, or does it come from a conspiracy of plutocrats in a position to profit from it?

The Google Hype-Meter

Greetings, West Nile mosquito-swatters.

I hope that by now you will be familiar with my style of putting over-hyped risks in their place. But how do you determine how over-hyped a problem is? Today I'm going to introduce a new metric to assess how out-of-proportion a particular death threat is: the Google Hits per Annual Fatality or GHAF metric.

Google and Hype

First of all, let me admit that reducing such a nebulous idea as "hype" to a number is an inexact science at best. However, I happen to be an inexact scientist: the perfect blogger for the job.

The people who post web content are not representative of the human race as a whole, so if there's something which netizens preferentially talk about, Google is going to reflect that bias. However, in most cases this bias will distort reality by at most about a factor of 10, so any enormous differences in the whole-world hype devoted to certain risk factors should be also present in a subject's Internet chatter. Luckily, some small risks are so enormously exaggerated that even an inexact measure like the GHAF can find them with confidence.

Calculating the GHAF

So, if we're agreed that Google hits will approximate the amount of talk on a subject, we can divide the number of hits by the annual death rate of a scare to get the GHAF, a relative measure of how much that particular problem has been overblown. Let's take a look at a few real-world examples of the GHAF.

Raw Data

• Malaria in Africa (GHAF = 1.5, 3 million Google hits [1] per approximately 2 million annual deaths [2])
  
• Cancer in the United States (GHAF = 94, 54 million hits [3] per 570 280 annual deaths: page 1 of [4], .pdf warning: 6 MB)
• West Nile Virus in the United States (GHAF = 5 500, 911 000 hits [5] per 165 annual deaths [6])
• vCJD, the human disease from eating a mad cow, worldwide (GHAF = 81 000, 1.4 million hits [7] for 139 cases over 8 years [8] - see my blog entry for an editorial[9])
  
• Alligator Attacks in the United States (GHAF = 293 000, 461 000 hits [10] per 1.57 annual deaths [11] - possibly the fatality rate is underestimated by this list and possibly a lot of the Google hits came from attacks on non-human targets)
  

Summary

The GHAF hype metric has a huge variability. It is a few thousand time greater for West Nile in the US than for malaria in Africa. Working from the assumption that most human life should be treated with roughly the same degree of care, these wildly differing GHAFs indicate that we spend far too much time worrying about the wrong things. With the GHAF, we can measure just how skewed our fears are.

The above list is far from exhaustive; does anybody want to look into adding traffic deaths or killer bees? I've set up a wiki page to keep track of the GHAFs of various risks. Feel free to add to it!

In any case, there's a huge variation in how much hype a risk gets compared with the actual danger involved. I realize there are only so many articles one can read about a certain risk before becoming inured to it, so one would expect the GHAF to be lower for real risks as not as much press will go to the millionth victim as to the first. However, the number of Google hits a risk gets is not even an increasing function of associated body count, showing that our problems run deeper that just weariness over old news.

Conclusions

I've already introduced two new measures of danger, the life expectancy decrease (LED) and the equivalent driving distance (EDD). However, these measures only ask how dangerous an activity is; they do not report how much that danger has been magnified by the media. With the GHAF, we can quantify just how out-of-proportion the hype is around a certain fear, and perhaps allow this measure of exaggeration to shape policy.

I look forward to your additions to my wiki page. What will my intelligent readers discover?

ExChange in the Weather

Greetings, rain-dodgers.

A few posts ago, I made a case for future-proof policy; that is policy which automatically keeps up with the best that today's technology has to offer. I've advocated the use of results-based prizes for rewarding the discovery of useful medical treatments, since they tend to align public and private interests. Today I'm going to talk about another way we could make our policy future-proof by harnessing the free market: have our government meteorological systems switch over to prediction market-based weather prediction.

The Status Quo

Today, typically large institutions or governments hire meteorologists whose full-time job it is to interpret computer models based (largely) on publicly-available data. It takes a relatively long time for new weather-prediction models to gain acceptance: each one must be academically-verified and promoted, and the uptake of better weather-prediction techniques seems to be a patchwork affair.

At the same time, there are hundreds of math and physics geeks with computer power to spare who like to try their hand at predicting just about anything. Even the private sector has been unable to tap this latent talent pool, as is evidenced by the fact that the Netflix prize has been claimed.

Netflix Prize Exhibits Geek Talent

The Netflix Prize rewards people for discovering new ways of predicting the ratings people give their movies based on which other movies they liked. The contest started on October 2nd, 2006, and by October 15th one team had already beaten Netflix's predictions enough to claim a prize. If even a private-sector firm is unable to efficiently harness the best numerical prediction methods out there, what hope does a government agency have of keeping cutting-edge?

Prediction Markets for Weather Prediction

Imagine instead that any math nerd with a computer and an Internet connection could instantaneously profit by predicting weather better than rivals without having to apply for meteorology jobs. There are already small-scale weather prediction contests (like the WxChallenge), but these are still mostly for bragging rights, not for general-purpose weather and climate prediction.

Prediction markets are like stock markets. You can already buy and sell shares in, for example, Hillary Clinton becoming the Democratic nominee, in an online prediction market. The shares are worth $1 if the event takes place, and nothing if it doesn't. The fact that Hillary's shares trade at about 40¢ means there's a market consensus that there's a 40% chance Hillary will be nominated. Prices fluctuate with every factor that may influence her nomination probability.

If we did the same for weather (and maybe even sweetened the pot a bit to provide incentives for high-volume trading and good predictions) we could find the geeks' market consensus over the chances of it raining tomorrow. Other predictions could be made too, like the total rainfall in a season, or any other season-related information which might be economically, socially or environmentally relevant. Storm warnings could be automatically posted through regular weather channels when the price of storm stocks rose above some (low) threshold, like 20¢.

Probably what would happen is that a few centralized weather servers would emerge which would make predictions about weather at many different locations, while local "old salts" who have a sense for the weather could also make a quick buck while letting the world in on their secret, quasi-instinctual privileged weather-sense.

Conclusions

There is no method as efficient as the anarchy of the market to predict the value of a commodity. If we commoditize knowledge about the weather, we will automatically harness all the disparate knowledges about our turbulent atmosphere to reward the weather-seers and keep the rest of us dry under umbrellas when appropriate.

Stay dry!

LeDopore

PS I have to add a final caveat: if some foreign power (like a government) had deep enough pockets and had a desire to manipulate the market (by, for instance, ruining 4th of July plans by buying shares in it raining everywhere), they could do so as long as they were prepared to sustain a virtually unlimited financial loss. Perhaps a good safeguard in the system would be to include automatic "bizarreness detectors" which would sound an alarm if some fishy market activity starts.

Consuming to Curb Consumption: the Case for a new Prius

Greetings, fellow humans.

Today's post is by request. One of my readers who is interested in minimizing his environmental impact asked about whether the energy costs of manufacturing a new car outweigh the energy costs of running an older, less fuel-efficient vehicle. The reader in question bikes to his law firm in all weather but snow, so he's already taken the cheapest (and probably most significant) step towards reducing his transportation-related energy consumption. However, many of us need cars at least once in a while, so it will be fun figuring out how many miles of driving you'd have to do to make buying a new car worthwhile.

Manufacturing a New Car

The Internet's too powerful these days. I thought I'd have to sift through details about modern steel-making techniques to get an estimate of how much energy goes into making a new car. It turns out that Google Answers beat me to it though: the average energy consumption associated with making a new car is 73 Gigajoules. Given that a liter of gas has about 32 Megajoules of energy, that means the energy content of manufacturing a new car is equal to the energy content of about 610 US gallons of gas. Since fossil-fuel-burning power plants are only about 40% efficient, the energy cost of making a new car is equivalent to that of burning about 1500 gallons of gas. (Aside: making cars from recycled steel reduces this energy cost by about 20%.)

Comparing Manufacturing Energy to Use Energy

Now that we know how much energy it takes to make a car, let's see how much you would have to drive a new, fuel-efficient car to make up for the extra energy used in producing it. Suppose that your new car gets about 45 miles per gallon while the old one got only 30. Then, for every 90 miles you travel, you'd save one gallon of gas from the fact that you bought a new car. Since making the new car consumed the equivalent of 1500 gallons of gas, you'd have to drive 135 000 miles to get to the break-even point, energy-wise.

Adding Emissions to the Mix

One thing I haven't factored into my account is the fact that power plants tend to have lower emissions than vehicles, since some power plants are zero-emission and others may have scrubbers (i.e., they may clean their exhaust of the worst polluting chemicals before dumping it into the air). In summary, this report says that 68% of the CO2 emissions from the life cycle of a typical car come from fuel consumption, 21% come from fuel processing and only 11% come from vehicle manufacturing, based on a vehicle lifetime of 120 000 miles. That means that, from an emissions standpoint, you have to drive your new hybrid only about 15 000 miles to reduce your net CO2 output.

Conclusions

I guessed that the energy cost of operating an old vehicle would be much greater than the cost of making a new, fuel-efficient one. The marketing behind new, hybrid cars is slick: it had me thinking about ditching old clunkers in the name of environmental responsibility. It's almost as if there's no corporate muscle behind the message "don't buy a new car while your old one still works." I guess that commercial culture will never miss a chance to tell us to buy something new, even when hiding behind the message "consume less!"

It's true that many new cars will probably make it beyond the 135 000 mile mark, meaning that you could ditch your old car for a new hybrid and rest assured that probably your net energy usage would go down eventually. It's also true that if you're worried about emissions as well as consumption, you would have to drive only about 15 000 miles to break even. Still, the environmental impact of buying additional vehicles, even if they're hybrids, is not insignificant, and should be factored into any decision over "going green" by ditching an old but still usable car.