Jumat, 29 Juni 2012

Copyright Math and the U.S. Entertainment Industry

Can anyone trust the U.S. entertainment industry to be honest with the business numbers they make public?

We've all heard of Hollywood's accounting frauds, where even those small movies with tiny production budgets that unexpectedly go on to become huge blockbusters making millions and millions of dollars at the box office somehow never generate a profit.

But what about the other things the moguls of the entertainment industry say about their business? Things like the number of jobs and the amount of money they say are lost every year in their industry because of the damage done by copyright piracy?

Rob Reid takes on the entertainment industry's "©opyright Math™" in the following TED presentation (HT: Barry Ritholtz):

Some quick notes:

  • The diameter of a penny is 0.750 inches (19.05 mm). It takes a lot of pennies to get to Mars!

  • If Hollywood and the music industry are hurting in their pocketbooks from copyright piracy, it isn't showing up in the amount of GDP they generate in the U.S. every year. See the Congressional Research Service report below....

  • Wyden Memo from CRS on Movie Industry

  • Nor does it seem to be affecting the government's count of the number of people who work in the motion picture and sound recording industry in the U.S. each year in any meaningful way.

All in all, it appears that the answer to the question we asked at the beginning of this article is simply "No."

Kamis, 28 Juni 2012

The "Hit" Equation for Box Office Gold!

A team of Japanese physicists and mathematicians has developed a mathematical equation for predicting whether or not a movie will become a hit at the box office!

Detailed in their article, "The 'hit' phenomenon: a mathematical model of human dynamics interactions as a stochastic process" in the June 2012 edition of the New Journal of Physics, the new model replaces the traditional method of forecasting the likely revenue for a movie, which incorporates aspects such as advertising budget, strength of word-of-mouth, star power, quality, et cetera.

These aspects still have a role, but the innovation in the Japanese physicists approach is to incorporate data from social network systems, such as blogs, to quantify the less tangible aspects of the factors that influence whether or not a movie will become a blockbuster, at least at the Japanese box office.

One of the more remarkable findings of the research is that the number of positive blog posts about a movie can be used to project its revenue:

Daily blog postings for a movie are a very important signal to measure the movement of purchase intention among persons in the society. We measure the daily data of the number of posts for movies using the site Kizasi, which is a service for observing blog postings in Japan. We measure the number of blog posts for 25 movies in Japan in order to compare this information with the box office gross income for each movie in Japan....

Blog postings for each film can be distinguished into positive, negative and neutral opinions. A positive opinion means that the blogger wants to watch the film or judges the watched film in a positive way. In figure 10, we show that more than half of the blogs show a positive opinion for several movies. Moreover, we find that the ratio of positive, negative and neutral opinions is almost constant during the duration of the movie opening. Thus, the observed blog posting counts can be considered to be proportional to the counts of positive blog posts.

According to this observation, we propose to use the daily number of blog posts as the daily 'quasi-revenue.'. Quasi-revenue is very useful for analysis, because it can be defined even before the opening of the movie. We can observe the increase in anticipation of a movie.

And because they've worked out how to use the data from social networking systems to measure the anticipation for a movie, they can do very well in predicting whether a movie will actually become a hit, as well as what kind of longevity it might have if it does!

If only Hollywood had thought to do that before releasing John Carter. Or Battleship. Or Rock of Ages. Or any of these movies!

Rabu, 27 Juni 2012


"Baked Rabbit Supreme" Recipe

  • 1 Rabbit, thawed
  • 1 cup Milk
  • 1 large can (2c.) cream of mushroom soup
  • pinch of cayenne
  • dash of curry
  • bay leaf
  • salt and pepper

Roll serving size pieces of rabbit in flour, season with salt and pepper and arrange in buttered casserole dish with cover. 

Add other ingredients, cover and bake slowly at 325 °F for about 90 minutes. Add more milk or water if liquid cooks down too low.

During the last 15 minutes of cooking, remove cover and let rabbit brown slightly.

Serve garnished with parsley.
Serves 4

Where Are U.S. Gas Prices Going?

Have you ever wanted to know where the average price of a gallon of gasoline in the United States was headed next?

If so, our latest tool was designed with you in mind! Building on James Hamilton's regression analysis of oil prices and U.S. gasoline prices from 2000 through the present, the main thing you need to know to predict where the price of gasoline in the U.S. is the price of a barrel of Brent crude oil, which if you're accessing our site directly, appears in the upper right corner of this post (via Oil-Price.Net)!

All you need to do is enter that current price in our tool, and we'll estimate how much the average price of a gallon of gasoline will be in the U.S. within the next several weeks.

Crude Oil Price Data
Input Data Values
Price per Barrel of Brent Crude Oil

Future Price of Gasoline in U.S.
Calculated Results Values
Average U.S. Price per Gallon

Hamilton explains the main factors behind the math:

The price of gasoline and price of Brent turn out to be cointegrated, meaning that any permanent change in the price of Brent eventually shows up as a permanent change in the price of gasoline. The coefficients of the above relation are very much what you'd expect. A barrel holds 42 gallons, and the estimated coefficient (0.025) is 1/40. The intercept (0.84) captures an average state and federal tax of 50 cents per gallon plus a bit over 30 cents in markups and other costs.

Hamilton: Predicted vs Actual Gasoline Price per Gallon in U.S., 2 January 2000 - 15 January 2012

With Brent on Friday at $91.50 and an average retail gasoline price about $3.47, we'd thus expect gasoline prices to come down another 35 cents a gallon or so from where they were on Friday. Historically those adjustments usually come pretty quickly. For example, last December U.S. gasoline prices temporarily fell about 25 cents/gallon below the long-run relation, but by March they were right back on track.

The default data for our tool is taken from Hamilton's Friday, 22 June 2012 data point described above. If you know the difference between the excise taxes per gallon of gasoline that apply in your state (visualized here) and the national average listed above, you can adjust our tool's results accordingly for your area.

One other factor to consider is the volatility in the price of Brent crude oil. Here, frequent fluctuations in the market price for a barrel of Brent crude oil means that it will be difficult to pin down a specific price for a gallon of gas in the U.S. at a specific point in the future.

But in general, our tool should put you very close to being in the right ballpark for where the price of gasoline is going in the U.S., and if Hamilton's chart is any indication, that's a pretty impressive achievement in itself.

Selasa, 26 Juni 2012

The Quality of Government-Produced Economic Data

China's economy entered into recession in December 2011.

That's very old news to readers of Political Calculations, a little-read blog that somehow managed to scoop a number of financial institutions and even the New York Times in reporting on the poor health of China's economy back in February 2012.

At least now we know why so many of these organizations were so far behind the curve in understanding that a large-scale slowdown in China's economy has been underway for nearly seven months now - they appear to actually rely upon the Chinese government for their economic data. The New York Times might perhaps be finally recognizing that error in judgment:

HONG KONG — As the Chinese economy continues to sputter, prominent corporate executives in China and Western economists say there is evidence that local and provincial officials are falsifying economic statistics to disguise the true depth of the troubles.

The article goes on to detail evidence of the slowdown that has shown up in recent months, mostly from an accumulation of stocks of coal, copper and other commodities, including the nation's rates of electricity production and consumption, which had previously been taken as a good measure of China's overall economic health.

But the thing that stands out to us is that they've known for decades that China's economic statistics were less than trustworthy, although for completely predictable reasons, they have become more unreliable during the past year:

Questions about the quality and accuracy of Chinese economic data are longstanding, but the concerns now being raised are unusual. This year is the first time since 1989 that a sharp economic slowdown has coincided with the once-a-decade changeover in the country’s top leadership.

Officials at all levels of government are under pressure to report good economic results to Beijing as they wait for promotions, demotions and transfers to cascade down from Beijing. So narrower and seemingly more obscure measures of economic activity are being falsified, according to the executives and economists.

"The government officials don’t want to see the negative," so they tell power managers to report usage declines as zero change, said a chief executive in the power sector.

As a result, a number of global financial institutions, who rely on China's economic data in assessing the potential for their investments in the country, were effectively caught with their pants down earlier this month:

Many Chinese economic indicators already show a slowdown this spring, with fixed-asset investment growing at its weakest pace in May since 2001. The annual growth rate for industrial production has edged below 10 percent, while electricity generation was up only 3.2 percent in May from a year earlier and up only 1.5 percent in April.

The question is whether the actual slowdown is even worse. Skewed government data would help explain why prices for commodities like oil, coal and copper fell heavily this spring even though official Chinese statistics show a more modest deceleration in economic activity.

Manipulation of official statistics would also provide a clue why some wholesalers of consumer goods and construction materials say sales are now as dismal as in early 2009.

Keeping accurate statistics for internal use by policy makers while releasing less grim figures to the public and financial markets may also help explain why China’s central bank suddenly and unexpectedly cut interest rates earlier this month.

Whoops! When the economic tide shifts, the worst thing that anyone in the financial world can be is late. Millions, and perhaps billions, of dollars are lost whenever that happens.

So how did a little-read blog manage to report that China's economy had fallen into recession over five months ago, well ahead of all these other venerable institutions?

Easy. That little read blog didn't use China's statistics to assess that nation's economic health. Instead, we used data collected and reported by the U.S. Census on the monthly value of the international trade between the two nations, which we think would be pretty difficult for Chinese officials to fabricate. As it happens, we've found that the year-over-year growth rate of that trade makes it possible to accurately diagnose the relative economic health of each nation, making this kind of analysis an excellent alternative to China's official government statistics for assessing the actual state of that nation's economy.

Speaking of which, here is what it looks like today:

Annualized Growth Rates of US-China Trade, January 1985 through April 2012

The U.S. Census will update its foreign trade data through May 2012 on 11 July 2012.

In this chart, assessing China's relative economic health may be done by examining the data series shown with the blue data points, which correspond to the year-over-year growth rate of U.S. exports to China. Here, a national economy will demand more goods and services from outside its borders when it is is experiencing strong economic growth, which shows up as a positive growth rate - the more strongly the economy grows, the higher the positive value.

But when that growth rate turns negative or is near-zero, which we'll define as growing at just single digit rates, that communicates that the national economy in question is experiencing at least a significant economic slowdown.

What we observe in our chart above is that China's economy is trudging along at a very sluggish pace. And for all practical purposes, has been since October 2011.

Meanwhile, the data series shown with the red points, which correspond to the year-over-year growth rates of China's exports to the U.S., indicate that as of April 2012, the U.S. economy has been growing more strongly than the Chinese economy.

With the U.S. economy now passing through the equivalent of a microrecession however, we anticipate the May 2012 trade data will fall back toward the zero growth line on the chart.

But then, we didn't rely on the U.S. government's official economic data to work out that the U.S. economy would be struggling at this point of time. We used an alternative data source to first make that call over a year ago....

It's just a good practice to not rely too much on "official" data reports, which can frequently be really off track. That's also a big reason why our readers our rarely surprised by sudden and unexpected economic news.

Senin, 25 Juni 2012

U.S. Gasoline Prices Fall Below the Magic Threshold

With the national average price of gasoline in the U.S. officially set to fall below $3.50 per gallon during this week, we have discontinued running our "Good Morning, White House Staffer" feature at the top of our site, as we promised last week - we've attached it for reference to the end of this post.

With that improvement in the average gasoline price, we anticipate that the reported pace of layoffs in the United States will change somewhat for the better within the next two to three weeks, as employers adjust their employee retention plans during their next pay cycle. Here, the employer reaction will be driving by the combination of their lower cost of doing business and an effective increase in the discretionary disposable income of Americans, who will increasingly have more money to spend on things other than gasoline.

We have previously observed that the $3.50 per gallon mark in the national average price of gasoline, as measured in terms of 2012 U.S. dollars, seems to be the magic threshold at which new jobless benefit claim filings reported by the U.S. Department of Labor are affected by gasoline prices.

In practical terms, we should see the trend in the number of new jobless claims shift to a less negative trajectory, as gasoline prices will have fallen to a level where they will stop having a direct impact upon the rate at which Americans file for first-time unemployment insurance benefits.

We say "less negative" instead of "positive" because other factors will dominate the overall trend. Namely, the failing economies in both Europe and Asia, where the falling relative demand for oil expected in the future is the principal reason why global oil and gasoline prices are now falling. We anticipate that the economic situation in these nations will increasingly and negatively affect the U.S. economy into 2013.

In the short term however, we anticipate that the U.S. economy will see a bit of improvement from the current quarter, which we've previously described as effectively being in a microrecession.

Enjoy it while you can!

Good Morning, White House Staffer!...

The Future Unemployment Rate
Enter: Today's Average USA Gasoline Price
U.S. Unemployment Rate In Two Years*
* If High Gas Prices Are Sustained.... See you tomorrow!

Average Gasoline Price Trends for Washington D.C. and USA

Washington D.C. Gas Prices Provided by GasBuddy.com

"Good Morning, White House Staffer" is a special feature we run whenever the average U.S. national retail price for gasoline rises above $3.50 per gallon!

Jumat, 22 Juni 2012

The Future Changes Back for the S&P 500

All noise events end. It's only ever a question of when.

For the U.S. stock market, the noise event that began on 6 June 2012 came to a sudden end on 21 June 2012, as investors suddenly realized that the window of time in which effective central bank and government-backed actions to bail out out ailing financial institutions and troubled national economies had closed, as signs of a global economic slowdown could no longer be ignored. Even CNBC's Jim Cramer noticed:

Interestingly enough, though, the market didn't fall Wednesday even though Fed Chairman Ben Bernanke said the economy is much slower-than-expected. The stock market seemed to ignore that commentary, Cramer noted. It reacted with the vengeance to every bit of bad news released Thrusday, though, and Cramer said he understands why.

"It's in a sour mood about this country where, despite Ben Bernanke's best efforts, Washington is doing nothing to create jobs, build new buildings, or even give us clarity on taxes for next year," Cramer said. "The mood is justified."

After all, the stock market had been going up on the belief that policymakers would take action to fix the economy. If they aren't doing anything, then Cramer thinks the market is in trouble.

But then, that's not a surprise, is it?

The final note on our chart above is significant, because as of 6 June 2012, the level of noise in the stock market has significantly spiked upward, largely on the combined speculation that the European Central Bank will act to bail out Spain's failing banking institutions, and that the Federal Reserve in the U.S. will attempt to shore up the U.S. economy, which has fallen into something of a microrecession (side note: as expected) in the second quarter of 2012.

And today, China's central bank has announced a surprise interest rate cut, which stands to further boost the central bank intervention-driven noise event that succeeded in pushing stock prices up so dramatically on 6 June 2012, as the markets recorded their best day to date in 2012.

We should note that these events are not taking place in a vacuum - the actions described are being coordinated among the world's major central banks and financial institutions, largely because they perceive that the global economy is nearing the event horizon of a global depression. They are considering these steps and taking action now largely out of that fear.

What we will see then in the market are stock prices being elevated far above where their expected future dividends per share would place them, as the market enters into a phase where noise, rather than fundamentals, drives it.

Unfortunately, all noise events end - it's only ever a question of when.

As we saw, when turned out to be 21 June 2012, as the latest short-lived noise event in the stock market came to its inevitable end. Without the noise from the world's central banks to distract from the market's underlying fundamentals, stock prices had only one place to go - back to where those fundamentals would have set them in the first place, as the future changed back to what it was, and really has been all along.

The only real question now is the reason why the central banks didn't act more effectively when the market was signaling that their actions would be welcome - is it because they've chosen not to act, or is it because they can't?

Kamis, 21 Juni 2012

Explain This Chart!

Why does the following chart, which spans 50 years of data for the United States in the post World War 2 era, look the way it does?

Ratio of U.S. National Average Wage Index to GDP per Capita, 1951-2010

In this chart, we observe that the ratio of the U.S. National Average Wage Index starts off at a level 127.3% of the U.S.' GDP per Capita in 1951, slowly rises to peak at 137.8% of GDP per Capita ten years later in 1961, then falls steadily for the next three decades until 1994 when it flattened out at around 88.3% of the U.S.' GDP per Capita.

Since then, it has been as high as 91.3% of GDP per Capita in 2001, and as low as 86.2% of GDP per Capita in 2006. In 2010, the ratio of the U.S. National Average Wage Index to GDP per Capita is 88.6%.

What we can't explain is why these patterns exist. How can the average wage earned by individuals in the U.S. go from being as much as 37.8% higher than the U.S.' GDP per Capita over forty years ago to being steadily 11.4% below that quantity three decades later. What factors caused this ratio to first rise, then fall, then stabilize?

Our next two charts visualize the source data behind our ratio calculation. The first shows the National Average Wage Index, as reported by the U.S. Social Security Administration, which at this writing, only covers the years from 1951 through 2010 (they will add the data for 2011 sometime in October 2012):

U.S. National Average Wage Index, 1951-2010

The second shows our calculation of the U.S.' GDP per Capita, where we've extracted the data for the years of 1951 through 2010 from our tool, The U.S. Economy at Your Fingertips:

U.S. GDP per Capita, 1951-2010

For us, the best part is that we have absolutely no idea what the answer(s) are. We have some hypotheses based upon other patterns or trends that have taken place over the years, but need to put together the data to put them to the test.

In the meantime, you're more than welcome to beat us to the punch - we don't have a timetable for coming up with a coherent explanation that accounts for all that's going on in that first chart. Just drop us a line with a link to what you find and can back with hard data, and we'll be happy to point our readers in your direction!


General Nutritional Facts :

Rabbit meat is a good source of protein and vitamin B12, Niacin(B3), Iron, Phosphorus and selenium. Rabbit meat is also low in sodium.

- Rabbit meat has 795 calories per pound. Chicken at 810. Veal at 840. Turkey at 1190. Lamb at 1420. Beef at 1440. Pork at 2050.
- Rabbit has a lower percentage of fat than chicken, turkey, beef or pork with 63% of unsaturated fatty acids at 63% of total fatty acids.
- Research shows that rabbit meat has been recommended for special diets such as for heart disease patients, diets for the elderly, low sodium diets and weight reduction diets.
- Because it is easily digested, it has been recommended by doctors for patients who has trouble eating other meats.
- The cholesterol level in rabbit meat is much lower than chicken, turkey, beef or pork.

Rabbit Breeders Association of Kenya:RABAK

Dr. Waigonjo carrying an angora rabbit
Rabbit Breeders Association of Kenya(RABAK) is regarded as the largest Association of rabbit farmers here in Kenya. It boasts of a membership of over 1000 rabbit farmers. They have made tremendous effort in streamlining and promoting rabbit farming as an enterprise in different parts of the country.

Based in thika, the association has been upfront in combating the many challenges that rabbit farmers face. These include source of market, breeds and breeding, Housing structures, Rabbit Diseases,Rabbit feeds among others. The association has trained many of their members who currently have skills in doing rabbit farming as an income generating activity.

Dr. Waganjo, the Chairman of the association has been instrumental in lobbying the governemnt and other stakeholders in supporting the rabbit industry in different capacities. The Association has succefully opened up a rabbit slaughter slab in Thika which acts as the main slaughtering facility for the farmers who wish to slaughter their rabbits to serve thier customers.

Mr. Onyango with an angora rabbit
"Rabbit meat is a healthy product and it is just a matter of time before it becomes a household meal in many of our dinning tables,"says the chairman.

Having visited him at his homestead (17th June 2012), I realised the passion and effort the chairman has and is diligently working to see the rabbit sector become a sustainable industry in Kenya. Kerayi Rabbit Processing Limited is proud to be associated with RABAK and are ready to work together to realise both of our objectives.

Rabu, 20 Juni 2012

The Scope of the Plastic Shopping Bag Problem

How big of a problem do plastic shopping bags pose to the environment?

Since the elected supervisors of Los Angeles' City Council recently voted to ban plastic shopping bags at the city's retailers, largely in response to "clean-water" advocates, who argue that the bags "pollute the ocean and the city's waterways", we thought we'd get a sense of just how big that problem really is.

Our chart below presents the answer, which refers to data that those who support bans on plastic shopping bags frequently cite in advancing their agenda:

Plastic Shopping Bags: The Scope of the Environmental Problem...

The values shown in the chart above were originally reported in 2004. There are a number of points to note about the results for the first-ever worldwide cleanup of the coastal areas of the United States and 100 other countries:

  1. The use of plastic shopping bags really began taking off worldwide in the 1980s.

  2. By 2003, "environmental groups" estimate that anywhere from 500 billion to 1 trillion plastic shopping bags were being used annually.

  3. Despite never having been done before, meaning that about as many bags as could be found would be found during the Ocean Conservancy's one-day long campaign to clean up the world's coastal areas in September 2003, just 354,000 bags were collected. Most, but not all, were made of plastic.

More fascinating to us however, we've discovered that so-called "green" advocates are incredibly fond of recycling the Ocean Conservancy's 354,000 bag cleanup figure from September 2003, citing it as being a valid figure that applies year, after year, after year. We're nearly at the decade anniversary and apparently, only 354,000 bags ever get cleaned up from the world's coastal areas each year!

Either that means the problem is not getting any worse despite a great deal of economic and population growth worldwide in the intervening years, which would have greatly increased the world's consumption of plastic shopping bags, or that these environmental activists just don't care enough about the environment to bother with picking up more than 354,000 mostly plastic bags from the world's coastal areas in any given year.

The alternative possibility is that a large number of environmental activists recycle the data because updating it would take actual effort on their part. Plus, there's the little matter of how foolish they might look if they ever fail to collect at least as many as their apparent annual quota of 354,000 bags!

If only these people cared more about the environment!...

Data Reference

Lowy, Joan. Plastic left holding the bag as environmental plague. Scripps Howard News Service. Seattle Post-Intelligencer. 20 July 2004.

Previously on Political Calculations

Selasa, 19 Juni 2012

The Economic Effects of Today's Falling Gasoline Prices

Good Morning, White House Staffer Snapshot, 16 June 2012 Good morning, White House Staffer!

We appreciate your daily visits, as you continue your ongoing efforts to closely monitor the U.S. gasoline price situation. We have, after all, tailored our top-of-the-page "Good Morning, White House Staffer" feature specifically to assist you in your daily task.

But we're afraid that we'll soon be taking down our feature, as the average retail price of a gallon of unleaded gasoline in the United States has fallen below $3.55 per gallon. Given the potential for volatility in that average price, we'll keep it going until it firmly drops below $3.50 per gallon, as this will help ensure that we don't discontinue our feature too early, should there be any unexpected supply disruptions in the next several weeks that might boost it back over the $3.55 per gallon mark.

That's good news for you, in the short term sense, as we expect that U.S. employers will react positively to falling fuel and transportation prices, which if our previous observations hold, will mean that the pace of weekly layoffs in the United States will change for the better within 2-3 weeks of the national average gasoline price dropping below $3.50 per gallon, which we would measure by the number of seasonally-adjusted new unemployment insurance benefit claims filed each week.

As we remarked on 31 May 2012:

If we're lucky in the short term, we'll see if the rate of layoffs that prompt new unemployment insurance claim filings shifts to a new, more positive trajectory if gasoline prices fall back below the $3.50 per gallon mark in the weeks ahead.

But then, we'll be unlucky in the longer term because that will mean that the world demand for oil will have dropped enough to make that possible, as much of the world appears headed for recession. That of course will have consequences for the U.S. economy.

In the meantime though, we continue to expect the U.S. economy will rebound a bit in the third and fourth quarters of 2012, after passing through the equivalent of a microrecession during the current second quarter. The story for 2013 will be very different, we're afraid....

That said, our previous advice to you to keep your résumé up to date still holds. We would also suggest that this summer will perhaps present the best opportunity you will have to sell your metropolitan Washington D.C. home before that real estate market changes.

And now you can't say that you weren't warned when it mattered most - when you still had time to do something about your situation!

Previously on Political Calculations

Senin, 18 Juni 2012

Really? Unexpected? Again?!

Back in August 2010, we became concerned that the professional U.S. news media really were being caught with their pants down far too often when reporting economic news, which they were perpetually describing as "unexpected".

So, we decided to help them out. We shared how we've become able to project the future for the number of seasonally-adjusted new jobless claims each week with such a high degree of accuracy. After all, using those methods, we've been able to transform this particular economic statistic into the most easy to forecast of all economic data.

So, imagine our surprise when we decided to pay attention to their reporting of the most recent new unemployment insurance claims from Thursday, 14 June 2012 when, well, let's let Bloomberg tell the story....

Claims for jobless benefits unexpectedly climbed by 6,000 to 386,000 in the week ended June 9 from a revised 380,000 the prior week that was more than first estimated, Labor Department figures showed today in Washington. Economists projected claims would fall to 375,000, according to the median estimate in a Bloomberg News survey.

Really? Unexpected? Again?! Who exactly are these economists that keep getting surveyed who it seems really couldn't forecast their way out of a wet paper bag?

Let's try something - let's take our statistics-based analytical method and find out just how far back in time we could have put ourselves in the right ballpark for predicting last week's numbers!

For our methods, we need at least six weeks worth of data to establish whether a trend exists, and ideally ten weeks to get a decent statistical picture of it (obviously, the more data the better - these values represent the minimum values we need to put the picture together). Since we confirmed in an update on 3 May 2012 that a new trend in the number of seasonally-adjusted new jobless claims had indeed taken effect, pegging its beginning to the week ending 18 February 2012.

Ten weeks later puts us at the data report for the week ending 5 May 2012. Here is the chart with the projections that we could have generated at that time, using the BLS' revised data through 28 April 2012:

Residual Distribution for Seasonally-Adjusted Initial Unemployment Insurance Claims, 26 March 2011 - 28 April 2012

Now, let's fill in all the data that has been recorded since....

Residual Distribution for Seasonally-Adjusted Initial Unemployment Insurance Claims, 26 March 2011 - 28 April 2012, with available data through 9 June 2012

Based upon just ten weeks worth of data, we could easily have projected the range where each subsequent data point would be some 95% of the time for each week up to at least a month and a half later.

Of course, since we have more data now, why not use it? Here's what the chart looks like today based on the data reported through the week ending 9 June 2012:

Residual Distribution for Seasonally-Adjusted Initial Unemployment Insurance Claims, 26 March 2011 - 9 June 2012

And now you know what "expected" really looks like. In fact, we'll give you 68.2% odds of the data for the week ending 16 June 2012 coming in between 375,378 and 393,652, and 95% odds that it will fall between 366,240 and 402,789. At least while the current trend holds (it may not for much longer, which we'll touch on tomorrow!)

Jumat, 15 Juni 2012

Walking It Off

Did you just eat something you really shouldn't have? Especially if you're trying to lose some weight?

Well, there's a pretty straightforward way to avoid taking the calorie hit to your waistline - you can boost your activity level to burn off the extra food you just took in. But how much do you need to boost it? And how?

Sure, you can go for a run, swim, bike, do aerobics, or some other fitness oriented activity, but what if you can't? Not because you literally can't, but rather, because you're somewhere where you can't dress for those activities - like work, school or just out and about during the middle of your day with hours to go before you might get home.

So you're limited. You need an activity that won't get you all sweaty, but that will help you burn more calories today than you would have had to if you hadn't decided to treat yourself to that treat. Something that you won't look too out of place doing wearing what you're wearing.

If you haven't figured it out long before now, we're talking about walking. And now, since that's really the only healthy and not out-of-place option for your situation, we need to talk about how much extra walking you're going to have to do to wash out that treat you chose to eat.

How Many Calories Were In That Treat?
Input Data Values

How Long Will It Take You To Walk Those Calories Off?
Calculated Results Values
Approximate Time

Fortunately for you, we have an app for that! Just enter the amount of extra calories you consumed, and we'll give you a good ballpark estimate of how much extra walking you're going to have to do to keep them from being a permanent addition to your waistline!

Our tool is based on back of the envelope math done by fitness expert Craig Harper, who translated the amount of time and calories consumed by various treats into the amount of time it would take a 160 pound person to walk them off at a speed of three miles per hour.

As it happens, 160 pounds is the average self-reported weight for a woman in the United States, at least as reported by Gallup, which makes this a pretty useful weight to use as a rule-of-thumb benchmark. If you weigh more than that amount, it will take you a little less time to walk off the extra calories you ate, and it will take longer if you weigh less, but the total amount of time you need to spend walking should be be pretty close.

But really, perhaps the best way to use this tool is as a guide for deciding whether you should eat those extra calories in the first place!

Image Source: National Institute of Health

Kamis, 14 Juni 2012

Taxes at the Margin

If your tax rate goes up by a lot, will the amount of taxes that you pay go up by a lot as well?

You might think so at first, but as we'll show you in this post, the answer is that your taxes will likely go up, but probably by not anywhere near as much as you might have thought, and certainly not by anywhere near as much as the politicians imposing the tax hike might like.

City Seal of Derby, Connecticut

To understand why, let's use a real world example. Let's say we're talking about property taxes, such as those in Derby, Connecticut, where the mill rate for the town's property taxes has just been jacked up from 27.9 cents to 36.6 cents per $1,000 of its assessed property value.

That increase in tax rate should, if everything else were kept equal, result in your property tax bill going up by over 31%! That result assumes that if you had a property in Derby whose assessed value was $1,000,000 last year, you would have paid $27,900 on it. With that same $1,000,000 valuation this year, with the higher property tax rate, you would pay $36,600, some $8,700 (or just over 31%) more than you paid last year.

[Yes, we know our lone reader in Derby, Connecticut is snickering at the idea that there are any million dollar homes in town, but please bear with us!]

Clearly, that would be bad news for the property owners in the Top 1%, wouldn't it? The town of Derby, Connecticut could really be sticking it to its landed aristocracy with that kind of massive property tax hike while being able to fully support the full amount of spending its civic leaders want to do, right?

But there's one major problem with achieving that result in reality - the assumption that everything else is being kept equal is false! And what actually happened with Derby, Connecticut's property taxes helps show why huge increases in tax rates don't necessarily translate into huge increases in the amount of taxes actually collected for the government involved!

What has actually happened is that at the same time Derby boosted its property tax rate, it also altered its assessed values for the properties to which it would be imposed. Here's how that affected one resident:

A house on Hawthorne Avenue near E Street total 2010 assessed value was $183,120.

$183,120 × 27.9 mills / 1,000 = $5,109 (the old tax bill)

The revaluation Gods now say that same house is now assessed at $140,280.

$140,120 × 36.6 mills /1,000 = $5,134 (the new tax bill)

$5,134 – $5,109 = A $25 increase in taxes under the spending plan proposed by the Derby tax board.

NOTE: This is only one example of one property in Derby. The revaluation Gods do not look at all assessments the same.

Here, we see the change results in an increase, but one that's just $25 higher, or just under 0.5% more than the resident's previous property tax bill. That's way less than the 31% increase suggested just by the increase in the town's property tax rate!

These kinds of dynamics are a big reason why the phenomenon of Hauser's law works with respect to the nation's federal income tax, regardless of however income tax rates have been set since the end of World War 2. To get high tax rates passed into law, politicians have to provide increased tax deductions, tax credits and provide other special channels by which paying taxes may be avoided to keep the actual amount of taxes paid from increasing to levels where people who can affect their ability to remain in power would really become upset at them.

As a result, the combination of concessions and tax avoidance strategies that develop in reaction to tax rate increases prevent them from ever generating the level of tax collections that governments hope will support their desired level of spending.

Worse, if tax rates are set too high, the amount of effort that people will go to to create special exemptions and deductions into the tax code or pursuing other tax avoidance strategies can generate lots of non-productive economic activity. If you need an example here, just think of all the things that the extremely wealthy have gotten the government to do to support hugely wasteful "green energy" projects through their funding and support of seemingly environmentally-oriented interest groups, which turn out to really be political front organizations advocating for the special interests of those in power.

If only they would learn once and for all to accept and live within their limits.

Rabu, 13 Juni 2012

Paper, Plastic or Cloth: Which Bag is Best for the Environment?

Which is the most earth-friendly: paper bags, plastic bags or cloth bags?

The answer to the question depends upon whether or not you really believe in science, because as they say in certain environmental activist circles, the "science is settled"! Here's the summary description of the bag found to be the best for the environment, which is defined as being the bag with the least negative impact upon the environment, as found in a very recent and thorough study on the topic:

The conventional HDPE bag had the lowest environmental impacts of the lightweight bags in eight of the nine impact categories. The bag performed well because it was the lightest bag considered. The lifecycle impact of the bag was dictated by raw material extraction and bag production, with the use of Chinese grid electricity significantly affecting the acidification and ecotoxicity of the bag.

Yes, the convential High-Density Polyethylene (HDPE) (aka "plastic") bag had the least impact upon the environment of all the bags considered in the study, which considered a number of bags made from different plastics, as well as both paper and cotton-based materials!

But that's only considering using each type of bag just once. For many eco-oriented people, the whole point is to reuse other kinds of bags to counteract the perceived environmental hazards posed by the conventional plastic bag.

Fortunately, the study revealed how many times the alternatives to the conventional plastic bag would have to be reused to overcome their own negative impacts to the environment:

Table 8.1 The amount of primary use required to take reusable bags below the global warming potential of HDPE bags with and without secondary reuse.

Here, we find that if a consumer only uses a conventional HDPE plastic bag just once (say to carry their groceries home before throwing the bag away), a paper bag would have to be reused 3 times, a heavy-duty plastic bag made from Low-Density Polyethylene (LDPE) would have to be used 4 times, a plastic "bag-for-life" made of non-woven Polypropylene (PP) would have to be used 11 times, and a cotton (or canvas) bag would need to be re-used 131 times!

The study reports that a canvas bag is expected to last for 52 trips (Table A.3.1). With that as a reference, a cotton/cloth canvas bag user does over twice the damage to the environment that a plastic bag using grocery shopper who throws away every plastic bag they get immediately after each shopping trip, as they will likely have to replace their more environmentally-destructive bag at least once long before they reach 131 uses!

However, if a consumer reuses 100% of their conventional HDPE plastic bags (say as trash bags), the number of uses needed for the other bags to have a lesser environmental impact than the conventional HDPE plastic bag rises by a factor of anywhere from 2.2 to 2.5, which we see in the table above. For example, that re-usable canvas bag would need to be used at least 327 times to be less damaging to the environment!

Which makes the eco-friendly canvas bag user over six times as destructive to the environment as the conventional consumer who simply re-uses all the plastic bags they get from the grocery store just once.

If only those anti-plastic bag advocates cared more about the environment....


Edwards, Chris and Fry, Jonna Meyhoff. Life Cycle Assessment of Supermarket Carrier Bags. Report SC030148. Environment Agency.