links of the day

Twitter, Facebook, and Personality Type

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What can one glean of someone’s personality type based on preference for Twitter vs. Facebook usage? David Hughes at Manchester Business School and his colleagues surveyed 300 people online and were scored on the “big five” personality factors of extraversion, neuroticism, conscientiousness, openness, and agreeableness. The study’s findings are summarized here:

People who used Facebook mostly for socialising tended to score more highly on sociability and neuroticism (consistent with past research suggesting that shy people use the site to forge social ties and combat loneliness). Social use of Twitter correlated with higher sociability and openness (but not neuroticism) and with lower scores on conscientiousness. This suggests that social Twitter users don’t use it so much to combat loneliness, but more as a form of social procrastination. 

What about using the sites as an informational tool? There was an intriguing divergence here. People who said they used Facebook as an informational tool tended to score higher on neuroticism, sociability, extraversion and openness, but lower on conscientiousness and “need for cognition”. Informational users of Twitter were the mirror opposite: they scored higher on conscientiousness and “need for cognition”, but lower on neuroticism, extraversion and sociability. The researchers interpreted these patterns as suggesting that Facebook users seek and share information as a way of avoiding more cognitively demanding sources such as journal articles and newspaper reports. Twitter users, by contrast, use the site for its cognitive stimulation – as a way of uncovering useful information and material without socialising (this was particularly true for older participants).

Finally, what about people’s overall preference for Twitter or Facebook? Again, people who scored higher in “need for cognition” tended to prefer Twitter, whilst higher scorers in sociability, neuroticism and extraversion tended to prefer Facebook. Simplifying the results, one might say that Facebook is the more social of the two social networking sites, whereas Twitter is more about sharing and exchanging information. 

It’s an interesting study, though I would have liked to see a sample size of a magnitude higher, and more balanced with the female-male ratio.

Smart People Ask Questions

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This Harvard graduate makes a few conclusions about smart people:

I have noticed one overarching theme among smart people: they ask questions. When someone explains something new to me, I’ll usually just nod my head like I know what they’re talking about. If I don’t understand something, I’ll just Google it later. After all, I don’t want this person to think I’m a moron. Smart people are different. If they don’t understand something, or even if they think they understand something, they’ll ask questions. I distinctly remember, as an immature and perhaps arrogant freshman, a guest lecture in one of my classes. After explaining what I thought was a straightforward concept, the guest lecturer asked if anyone had any questions. Looking around the room, every student simply nodded, indicating everything was clear. A question, however, came from a tenured professor who had undoubtedly been exposed to the material before. At the time, I thought nothing of it, and perhaps even thought that I was smarter than the professor because I understood a concept he/she didn’t. Now, I am confident that this professor did not ask the question just to make the guest lecturer feel better, to start a discussion, or anything else. The intonation of the question and the intensity with which the professor listened to the response definitively suggested that the professor’s question was genuine, and that the answer was of great importance.

Based on the research and findings of so many of the students and professors here, it’s clear that this trend is no accident. Not only do smart people ask questions when they don’t understand something, but they also ask questions when the world thinks it understands something. Smart people challenge the very limit of human understanding, and push the envelope of what’s possible farther than many people would argue it’s meant to be pushed. Smart people don’t take claims at face value, and smart people don’t rest until they find an explanation they’re comfortable accepting and understanding.

There’s a lot to add here, especially in terms of introversion and extroversion of individuals and their ability/desire to ask questions. But the author’s point is a good one.

Thought Experiment: The End of the NFL

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The NFL season may be over, but the conversation on the growing phenomenon of head injuries and cognitive problems among football players will continue. Tyler Cowen and Kevin Grier contemplate a thought experiment on the demise of the NFL:

Before you say that football is far too big to ever disappear, consider the history: If you look at the stocks in the Fortune 500 from 1983, for example, 40 percent of those companies no longer exist. The original version of Napster no longer exists, largely because of lawsuits. No matter how well a business matches economic conditions at one point in time, it’s not a lock to be a leader in the future, and that is true for the NFL too. Sports are not immune to these pressures. In the first half of the 20th century, the three big sports were baseball, boxing, and horse racing, and today only one of those is still a marquee attraction.

The most plausible route to the death of football starts with liability suits. Precollegiate football is already sustaining 90,000 or more concussions each year. If ex-players start winning judgments, insurance companies might cease to insure colleges and high schools against football-related lawsuits. Coaches, team physicians, and referees would become increasingly nervous about their financial exposure in our litigious society. If you are coaching a high school football team, or refereeing a game as a volunteer, it is sobering to think that you could be hit with a $2 million lawsuit at any point in time. A lot of people will see it as easier to just stay away. More and more modern parents will keep their kids out of playing football, and there tends to be a “contagion effect” with such decisions; once some parents have second thoughts, many others follow suit. We have seen such domino effects with the risks of smoking or driving without seatbelts, two unsafe practices that were common in the 1960s but are much rarer today. The end result is that the NFL’s feeder system would dry up and advertisers and networks would shy away from associating with the league, owing to adverse publicity and some chance of being named as co-defendants in future lawsuits.

They contemplate it might take some time, at least ten years:

Imagine the timeline. A couple more college players — or worse, high schoolers — commit suicide with autopsies showing CTE. A jury makes a huge award of $20 million to a family. A class-action suit shapes up with real legs, the NFL keeps changing its rules, but it turns out that less than concussion levels of constant head contact still produce CTE. Technological solutions (new helmets, pads) are tried and they fail to solve the problem. Soon high schools decide it isn’t worth it. The Ivy League quits football, then California shuts down its participation, busting up the Pac-12. Then the Big Ten calls it quits, followed by the East Coast schools. Now it’s mainly a regional sport in the southeast and Texas/Oklahoma. The socioeconomic picture of a football player becomes more homogeneous: poor, weak home life, poorly educated. Ford and Chevy pull their advertising, as does IBM and eventually the beer companies.

Very interesting read. Will the day ever come when Americans refer to soccer when they say football?

Why Presidents Fail

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From this extensive piece on Barack Obama and his presidency, James Fallows considers why presidents fail:

We judge presidents by the specific expectations they ask to be measured against: inspiration (Kennedy, Reagan, Obama), competence and experience (Eisenhower, the first George Bush), strategic cunning (Johnson, Nixon), integrity and personal probity (Carter), inclusiveness and empathy (Clinton), unshakable resolve (the second Bush). But eventually each is judged against his predecessors, a process that properly starts with a reminder that all begin their terms ill-equipped, in ways that hindsight tends to obscure.

The sobering realities of the modern White House are: All presidents are unsuited to office, and therefore all presidents fail in certain crucial aspects of the job. All betray their supporters and provoke bitter criticism from their own side at some point in their term. And all are mis-assessed while in office, for reasons that typically depend more on luck and historical accident than on factors within their control. These realities do not excuse Obama’s failings, but they do put his evolution in perspective.

Presidents fail because not to fail would require, in the age of modern communications and global responsibilities, a range of native talents and learned skills no real person has ever possessed. These include “smarts” in the normal sense—the analytical ability to cope with the stream of short- and long-term decisions that come at a president nonstop. (How serious is the latest provocation out of North Korea? What are the “out year” budget implications of a change in Medicaid repayment formulas?) A president needs rhetorical clarity and eloquence, so that he can explain to publics at home and around the world the intent behind his actions and—at least as important—so that everyone inside the administration understands his priorities clearly enough that he does not have to wade into every little policy fight to enforce his preferences.

A president needs empathy and emotional intelligence, so that he can prevail in political dealings with his own party and the opposition in Washington, and in face-to-face negotiations with foreign leaders, who otherwise will go away saying that this president is “weak” and that the country’s leadership role is suspect. He needs to be confident but not arrogant; open-minded but not a weather vane; resolute but still adaptable; historically minded but highly alert to the present; visionary but practical; personally disciplined but not a prig or martinet. He should be physically fit, disease-resistant, and capable of being fully alert at a moment’s notice when the phone rings at 3 a.m.—yet also able to sleep each night, despite unremitting tension and without chemical aids.

Regardless of your political stance, I suggest setting aside an hour to read this piece by James Fallows.

The Rise of V for Vendetta

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First published in 1982, the comic series V for Vendetta charted a masked vigilante’s attempt to bring down a fascist British government and its complicit media. Many of the demonstrators are expected to wear masks based on the book’s central character.

The BBC asked Alan Moore, author of V for Vendetta, for his thoughts on how his creation had become an inspiration and identity to Anonymous and other protesters around the world.

At the start of the 1980s when the ideas that would coalesce into V for Vendetta were springing up from a summer of anti-Thatcher riots across the UK coupled with a worrying surge from the far-right National Front, Guy Fawkes’ status as a potential revolutionary hero seemed to be oddly confirmed by circumstances surrounding the comic strip’s creation: it was the strip’s artist, David Lloyd, who had initially suggested using the Guy Fawkes mask as an emblem for our one-man-against-a-fascist-state lead character.

When this notion was enthusiastically received, he decided to buy one of the commonplace cardboard Guy Fawkes masks that were always readily available from mid-autumn, just to use as convenient reference.

To our great surprise, it turned out that this was the year (perhaps understandably after such an incendiary summer) when the Guy Fawkes mask was to be phased out in favour of green plastic Frankenstein monsters geared to the incoming celebration of an American Halloween.

It was also the year in which the term “Guy Fawkes Night” seemingly disappeared from common usage, to be replaced by the less provocative ‘bonfire night’.

On Failing vs. Forgetting

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Bryan Caplan writes:

According to the human capital model, failing (i.e., never knowing) course material should have exactly the same career consequences as forgetting (i.e., no longer knowing) course material.  Either way, you lack the skills – and the labor market should treat you accordingly.

According to the signaling model, in contrast, the consequences of failing and forgetting can totally diverge. When you fail to learn useless material, you send a bad signal.  When you demonstrate mastery of useless material, you send a good signal – whether or not retain what you learned.  Employers naturally snub people who fail, yet smile upon those who merely forget.

Caplan is right on both accounts. But what he neglects to consider is, for instance, employers’ interpretation of the signal. If someone failed their computer science courses, for example, it’s highly unlikely they’ll do well as a computer scientist. On the other hand, if someone studied computer science in undergrad, did quite well, but chose to go into another field upon graduation (and consequently forgot most of what he learned in those CS courses), is that equivalent to the student who failed most of his courses? Absolutely not. Why? Because the person who has mastered the courses previously has a very likely chance of re-learning the material. What’s more, he’ll do so quicker because he has familiarity with the material better than the person who failed.

It comes down to this: in most cases, the person who forgets is a better candidate than the one who failed.

On Art as Investment

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Sarah Thornton writes about the “gravity-defying surge” of people buying art as investments:

The bulk of revenues comes from “ultra high net worth” individuals, many of whom operate at a level far above national economies. Even those who have taken blows in recent years remain super-rich. If they were worth £3bn in 2007, maybe they’re worth £2bn now. It’s not like they’re feeling the pinch.

The burden for the stinking rich is what to do with their money. There is currently no interest to be earned on cash, so they can’t leave it in the bank. The property market is nearly paralysed and, for these globetrotters, the drawback of real estate is that it is tied to specific currencies. A Mayfair flat sells in pounds, but the Francis Bacon painting that hangs on its wall could sell in Hong Kong dollars and take up residence on a yacht in the South Pacific. Like historic or extra-large diamonds, works by artists with international recognition are a hedge against volatile currency fluctuations.

Fifteen years ago financial advisers were not in the practice of recommending that rich people diversify their portfolios by buying art. Now it is the norm. While buying emergent art is high-risk, speculative investment, acquiring established masterpieces is perceived as the opposite – a back-up in hard times. If all goes wrong in the world, if the eurozone cracks, the Middle East erupts in war, and a tsunami hits Manhattan, that rare, portable 1964 Marilyn by Andy Warhol will still be worth something.

The auction houses are fostering a globalisation of taste with the help of galleries with international outposts such as Gagosian, Hauser & Wirth and now White Cube. While wealthy Belgians used to spend their money differently from wealthy Indonesians, this is decreasingly the case.

Felix Salmon counters:

This would be a lot more convincing if Thornton actually named or quoted any of the financial advisers who are reportedly “recommending” buying art as an investment. Because I’d love to talk to one. Art’s a dreadful investment: it’s got a negative carry, it’s highly unpredictable in terms of value, there’s no reason whatsoever why prices should go up rather than down, and, of course, you can put your elbow through it at any time.

In my experience, the only people who ever recommend that rich people diversify their portfolios by buying art are people who are going to make money, somehow, from the deal: people selling art investment or advisory services. Everybody else is generally pretty sensible, and sticks to saying the simple truth: Buy art because you love it, not because you think it’s going to rise in value.

More generally, the stinking rich are, as a rule, swamped with bright ideas from people guiding them on what to do with their money. They all have family offices, replete with highly-paid investment managers: The alternative here is not to simply leave the money in the bank, earning no interest. (More likely, they own the bank, take other people’s deposits, and lend them out at a healthy profit.)

And the idea of art as “a hedge against volatile currency fluctuations” is just bonkers; I’m not at all surprised that the line appears in a column for the Guardian, rather than in Thornton’s normal home of the Economist. If you have billions of dollars and you want to hedge against currency fluctuations, then — and I hope you’re sitting down for this — you hedge against currency fluctuations. Options and swaps and futures and forwards and the like are as commoditized as they come in the foreign-exchange markets, and much easier and cheaper to buy and sell than any major artwork.

Thornton’s wrong, too, about the intrinsic value of a 1964 Marilyn by Andy Warhol. If it was worth 10% of its current value a few years ago, it can be worth 10% of its current value in a few years’ time, too. Admittedly, 10% of its current value is still “something”. But that hardly makes the Warhol a remotely sensible investment. The whole point of art is that it has no intrinsic value: that its financial value is a magical number which is some highly variable function of how much various incredibly rich people love and covet the work.

I agree with Felix Salmon. Artwork is not a viable investment: it’s illiquid and highly speculative and subject to modern tastes and preferences. Buy artwork because you enjoy looking at it on your wall. Don’t buy it thinking that you can sell it later for a profit.

Astana: The Modern Capital of Kazakhstan

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This is a very good piece in National Geographic on Nur­sultan Nazarbayev (Kazakhstan’s president since 1991) and his quest to build a new, modern capital for the country (now located in Astana):

Rich in oil and other mineral resources, Kazakhstan has lavished billions on the new capital, inviting some of the world’s leading architects to showcase their work on the Left Bank of the Esil River, which separates the administrative “new city” from the older, mostly Soviet built district on the Right Bank. The results are eclectic, visually arresting, and not to everyone’s taste. But love it or hate it, Astana is here to stay, its population having swelled from 300,000 to more than 700,000 in a decade. Along the way, it has become a billboard for Kazakh nationalism and aspirations—a statement as much as a city.

Nazarbayev has given several reasons for moving the capital from Almaty, among them its vulnerability to earthquakes and its proximity to the Tian Shan mountains, which limit its room to grow. But geopolitics also played an important role. Nazarbayev is widely believed to have been motivated by fear of Russian territorial designs on northern Kazakhstan, which borders Russia and encompasses a large share of Kazakhstan’s ethnic Russian population. In any case, few were willing or able to challenge the authoritarian leader, who remains popular for promoting stability and economic growth despite criticism of his government for corruption and human rights abuses.

To build his dream city, Nazarbayev solicited help from foreign benefactors eager to do business with Kazakhstan—among them the Persian Gulf emirate of Qatar, which funded construction of a mosque with space for 7,000 worshippers. (Islam is the dominant faith in Kazakhstan, although the state is officially secular.) He also brought in leading global talents such as the late Japanese architect Kisho Kurokawa, who designed Astana’s master plan. But he never left any doubt as to who is in charge. Sarsembek Zhunusov, the city’s chief architect, recalled his colleagues’ trepidation when Nazarbayev declared some years ago that he wanted a huge pyramid built.

If you look at photos of the buildings in the city, they look nothing short of spectacular. No wonder the comparisons in the article of a modern-day Peter the Great.

Warren Buffett: Don’t Invest in Gold

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In his most recent letter to shareholders, Warren Buffett is bullish on stocks and bearish on commodities such as gold. He explains that gold is an asset that will never produce anything, but is purchased in the buyer’s hope that someone else — who also knows that the asset will be forever unproductive — will pay more for it in the future. Citing historical perspective and an analogy to boot, Buffett explains how investing in gold is a bad idea:

This type of investment requires an expanding pool of buyers, who, in turn, are enticed because they believe the buying pool will expand still further. Owners arenot inspired by what the asset itself can produce — it will remain lifeless forever — but rather by the belief that others will desire it even more avidly in the future.

The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.

What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth — for a while.

Over the past 15 years, both Internet stocks and houses have demonstrated the extraordinary excesses that can be created by combining an initially sensible thesis with well-publicized rising prices. In these bubbles, an army of originally skeptical investors succumbed to the “proof ” delivered by the market, and the pool of buyers — for a time — expanded sufficiently to keep the bandwagon rolling. But bubbles blown large enough inevitably pop. And then the old proverb is confirmed once again: “What the wise man does in the beginning, the fool does in the end.”

Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce — gold’s price as I write this — its value would be about $9.6 trillion. Call this cube pile A.

Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers — whether jewelry and industrial users, frightened individuals, or speculators — must continually absorb this additional supply to merely maintain an equilibrium at present prices.

A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops — and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

See the complete letter here.

The FBI File on Steve Jobs

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Late last year, Michael Morisy contacted the the FBI, with a request under the Freedom of Information Act to attain the FBI files on Steve Jobs, former CEO of Apple. His full correspondence appears here.

“Several individuals questioned Mr. Jobs’ honesty stating that Mr. Jobs will twist the truth and distort reality in order to achieve his goals,” according to the report released today by the FBI.

The FBI interviewed Jobs and people who knew him as part of a background check for a possible appointment by former President George H. W. Bush. Interviews were conducted with unnamed associates of Jobs to judge his character, drug use and potential prejudices, according to the file. Near the end, there is a mention of a bomb threat.

The FBI report on Steve Jobs is decades old, and a large portion of the material is redacted, but it still makes for an interesting look-through. The full file is here.