Variation of St. Petersburgh Paradox Simulation

Related previous posts: Simulation of St. Petersburg Paradox

In the traditional St. Petersburg Paradox, there is 1/(2^n) chance of an outcome of (2^n), for all positive integers n, summing up to an expected value of infinity, but with realistic outcomes far lower than that. What if the base is changed to an integer other than two? In this exercise, bases of 2, 3, 4, 10, and 100 were used to run similar simulations, each with 100,000 trials. To perform this variation, only two lines of codes needed to be changed from the original Java code. For base 3, for example:

• "while(flip < 0.5)" becomes "while(flip < 1.0/3)"
• "double result =  Math.pow(2,times)" becomes "double result =  Math.pow(3,times)"

After running the simulation, the results and their analysis as follows:

Base	Average/Base	Max/Base	St. Dev	Log(max)/Log(base)
2	9.75	65536	784.25	17
3	7.49	59049	724.34	11
4	6.47	65536	956.40	9
10	5.48	100000	3315.75	6
100	3.46	10000	12282.46	3

Given the different bases, the average result / base value becomes the most significant output to compare. As the value of the base increases, the normalized average decreases, since the probability of getting the lowest value dramatically increases. For base of 100, the result will simply be 100 for 99% of the time. While it's true that the output will also be dramatically greater, the clustering around high-probability, low-value region outweighs the rarity of low-probability, high-value regions.

The max result / base value is a bit harder to decipher. This is the output value were the game started with output of 1, rather than the value of the base, offering a normalized maximum output value. There doesn't seem to be a clear-cut trend of these values as the bases change. The lack of trend is reasonable, given that it only takes one rarity event to record the maximum. The standard deviation drastically increases as the base increases, a more obvious reflection of the greater variance in the output as the base increases. The logarithm of maximum value / logarithm of base is equivalent to the maximum number of times that the game ran for. The decreasing trend is reasonable, given that the probability of extending the game decreases dramatically as the base increases (50% for base 2, 1% for base 100).

The last three trends (or two trends plus the lack of trend for max/base) are reasonable. But the average result / base value is still the most intriguing, since the expected values, regardless of the base, are still all infinity. Instead, as expected, the greater the variance (bigger bases), the further the deviation from the expected value to the realistic output value (smaller normalized results).

Performances of Defensive Stocks from Pre-Crisis to 2011

Defensive stocks are those that perform well during a period of economic slowdown. They generally do not outperform the market during periods of rapid economic growth, and thus serve as low-risk securities. A MSN article from May 2010 lists 14 "safe stocks to stock up on." Of the 14, three are currently listed on the Dow Jones Industrial Average. They include Johnson and Johnson (NYSE: JNJ), which is involved in health care products, Proctor and Gamble (NYSE: PG), which focuses on consumer packaged goods, and Wal-Mart (NYSE: WMT). The historical performances of these stocks from mid-2008 to present were retrieved and analyzed. For comparison, similar data were retrieved for two companies not part of the Dow: Google (NYSE: GOOG) and Caterpillar (NYSE: CAT), and the Dow Jones Index itself. The results are as follows:

Name	High	Low	Decrease	Current	Increase
JNJ	72.22	46.60	35.47%	65.98	41.59%
PG	73.15	44.18	39.60%	66.67	50.91%
WMT	63.17	46.42	26.52%	59.99	29.23%
GOOG	685.33	257.44	62.44%	633.14	145.94%
CAT	115.41	22.17	80.79%	92.25	316.10%
DJI	13058.20	6626.94	49.25%	12294.00	85.52%

Indeed, as the figure shows, during the financial crisis of late 2008 and early 2009, the percentage decrease from the highest closing trades to the lowest closing trades was the greatest for Google and Caterpillar, which are not defensive stocks. Then came the Dow index, which featured a mix of defensive and non-defensive stocks. Finally, the three defensive stocks saw the smallest decrease during those economic downturn times. On the reverse, as the economy has been recovering over the past 2+ years and stock prices have been increasing again, the three defensive stocks saw the smallest percentage gain, while Google and Caterpillar both saw enormous gains, with the Dow motley in the middle.

All this goes to say is that defensive stocks have low risk and variance. In good times, they return less than the others, but in bad times, they don't lose as much as the others. Wal-Mart's low variance is exemplified in an even more profound way by realizing that its post-crisis trough was hit on February 2009; however, that price of 46.24 was actually higher than that during January 2008, and wasn't far off from the prices during much of 2006 and 2007, when the economy was growing strongly. Defensive stocks usually cover common products, used whether the economy is growing or shrinking. Think of the sectors the defensive stocks here cover: healthcare, consumer package, and retail, all of which are rather basic necessities and face relatively inelastic demand. In all, coming together in a group of ideas are: defensive stocks, common goods, necessities, inelastic demand, low risk, low variance, low returns, and low losses. Whether these are better than other stocks will ultimately depend on the state of being of the macroeconomics.

Sources:

• http://articles.moneycentral.msn.com/learn-how-to-invest/14-safe-stocks-to-stock-up-on.aspx
• http://www.google.com/finance?q=NYSE%3AJNJ
• http://www.google.com/finance?q=NYSE%3APG
• http://www.google.com/finance?q=NYSE%3AWMT
• http://www.google.com/finance?q=INDEXDJX%3A.DJI
• http://www.google.com/finance?q=NASDAQ%3AGOOG
• http://www.google.com/finance?q=NYSE%3ACAT

Lockheed Martin Corporation (NYSE: LMT)

Topping the list of top US federal contractors at over $35 billion (followed by Boeing at over $19 billion) in the fiscal year of 2010, Lockheed Martin continues to lead in global aerospace, defense, and security. Headquartered at Bethesda, MD, right outside Washington DC, Lockheed Martin recently secured a Japanese order of 42 F-35 fighter planes. Looking to modernize their fighter fleets, the Japanese will replace the Boeing F-4s, which were last assembled in 1981. It will cost $114 million for each of the first four units.

Stocks for Lockheed Martin currently trade at 80.87. Financial statements of the company include its strong health. The company secured over $500 million of net income in each quarter for the past year. Total equity has hovered around $3 billion during the same time. In terms of cash flow, although there have been a few years recently with negative net cash flows, quarterly data show drastic increase in cash amounts for the first 9 months of 2011. Cash levels hover around 9.4% as of Q3-2011. The current level is around 1.2, indicating that it has more current assets than current liabilities.

Sources:

• http://www.google.com/finance?q=NYSE%3ALMT
• https://www.fpds.gov/fpdsng/index.php/reports
• http://news.businessweek.com/article.asp?documentKey=1377-aXfrkWe.hC7Q-5T53DPIFU42QK5IM2N5TRAHA5B

The Boeing Company (NYSE: BA)

Currently, each share is trading at 72.54. Growth for the company looks mildly healthy. Fitch predicts a stable 2012 outlook for the global aerospace and defense sector. Boeing may be one of the few companies facing short-term gains if further unsettling developments unfold in the Korean Peninsula after the death of Kim Jong Il.

Looking at the financial statements, the numbers look relatively healthy as well. Net income and equity both have been positive and growing for 2011, with net income climbing from $586M for Q1 this year to $1,094M for Q3. At the cash flow statement, there are several negative subtotals. But the cumulative negative cash flow in 2010 mainly stems from investment. For the 9-month period ending this September, cash flow from financing was beyond a billion in the negative, mainly from dividends. A look at the annual cash flow statements from the past 4 years reveals that while dividends are increasing, the growth rate has drastically slowed down.

Sources:

• http://www.google.com/finance?q=NYSE:BA
• http://online.wsj.com/article/BT-CO-20111220-710863.html
• http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/12/19/investopedia69524.DTL

Response to "First Person: How I Got Myself $80,000 in Debt"

Recently, Yahoo contributor S.L. Carroll wrote an article detailing how she incurred the enormous amount of debt early in her life, and in retrospect seems regretful of her decisions. For two of the categories - student loans and medical bills - most can sympathize with. Rising tuition has been a severe concern in the past few years, and the medical insurance has been a topic of heated political debate. But the other category - credit cards - is less likely to draw sympathy. Although Carroll admits that she "never should have applied for a credit card much less six of them," her reasoning for the prior behavior was what "the free money was addicting."

Debt is not free money. It is a liability, an obligation of reimbursement. Applying for credit cards wasn't the problem. Taking on debt gives access to more assets, which could be a beneficial short-term decision for an individual or a firm, particularly when new ventures are sought or begun. But it also adds onto liabilities, and requires the responsibility to recognize that obligation, at the bare minimum. Debt is not free money. Recognize the obligation to get the reimbursement under control, or one is stuck under a heap of burden. For a corporation, it could mean the difference between survival and bankruptcy. For an individual, it could mean the difference between proactive financial planning and reactive financial recovery.

It is difficult to grasp that concept when the current government debt is over $15 trillion, or over $48K per person, in the United States. But fiscal responsibility can begin at the individual level. Better yet, fiscal responsibility needs to begin at the individual level, where one can and does control his or her own destiny. In this case, it's not about reaching bipartisan agreements or arguing over political values. Instead, it's crystal clear as recognizing that debt is not free cash; taking on loans means incurring the responsibility and obligation to repay the amount.

Sources:

• http://finance.yahoo.com/news/first-person-got-myself-80-000-debt-163400779.html
• http://www.brillig.com/debt_clock/

Simulation of St. Petersburg Paradox

St. Petersburg Paradox exemplifies a situation where the expected value of an outcome doesn't reflect the realistic outcomes. The game can be played by flipping a coin until heads comes up. Let the outcome be 2 to the power of the number of coin flips. The derivation won't be shown here in detail (but is available on the link below), but essentially, there is 1/(2^n) chance of an outcome of (2^n), for all positive integers n. The expected payoff for each integer n is therefore 1, and the sum of the expected payoffs, the expected value of this game, is therefore infinity.

Realistic outcomes are far from this expected value. One can briefly visualize this by realizing that there's 50% chance of an outcome of 2, 25% chance of an outcome of 4, 12.5% chance of an outcome of 8, etc. Simply put, the chances of very high outcomes are very small. Let's use programming to simulate numerous rounds of this game. The Java code for the simulation method is as follows:

public static int simulation()
 {
     int times = 0;
     double flip = 0;
     while(flip < 0.5) //reflecting the 50% chance of getting heads
     {
         flip = Math.random();
         times++;
     }
     double result =  Math.pow(2,times);
     return (int)result;
 }

Writing a for loop code, this method was called 1,000,000 times, with the output values exported onto Microsoft Excel. The values were sorted and counted, and the results are as follows, along with the expected frequency of the different outcomes.

n	Outcome (2^n)	Frequency	Expected Freq	Deviation
1	2	500,592	500,000.00	0.118%
2	4	249,969	250,000.00	-0.012%
3	8	124,870	125,000.00	-0.104%
4	16	62,262	62,500.00	-0.381%
5	32	30,951	31,250.00	-0.957%
6	64	15,741	15,625.00	0.742%
7	128	7,843	7,812.50	0.390%
8	256	3,883	3,906.25	-0.595%
9	512	1,900	1,953.13	-2.720%
10	1,024	993	976.56	1.683%
11	2,048	484	488.28	-0.877%
12	4,096	233	244.14	-4.563%
13	8,192	144	122.07	17.965%
14	16,384	71	61.04	16.326%
15	32,768	34	30.52	11.411%
16	65,536	12	15.26	-21.357%
17	131,072	11	7.63	44.179%
18	262,144	3	3.81	-21.357%
19	524,288	4	1.91	109.715%

Even with 1 million trials, the greatest output value was only 524,288, which reflects the rare instance of 18 straight flips of tail before finally getting a heads. This only happened 4 times out of the 1 million trials, and was even considered strong positive deviation from the expected frequency of 1.91. The expected value of this game (expected average value) is still infinity, as the math demonstrates.

In this simulation of 1,000,000 trials, the average output value was 20.496084. The results are, as expected, very skewed to the right. If we let the output value measure monetary amount, it's interesting to note that the top 996 trials (0.0996%) contains 51.30% of the values. The top 0.7772% contains 65.86%. The bottom 96.8644% contains only 24.33%.

Sources:

• http://plato.stanford.edu/entries/paradox-stpetersburg/

Public Ownership of Sports Franchises

One may not initially associate sports franchises with issuing stocks, but Green Bay Packers are doing exactly that to finance the addition of seats at Lambeau Field. A publicly owned corporation since 1923, the Packers had over 110,000 shareholders (larger than the population of Green Bay) owning 4.75 million shares before the most recent sale on Tuesday. Although deficient of many advantages associated with traditional stocks, the Packers stocks hold more important sentimental values for the stakeholders.

Among the disadvantages, these stocks receive zero dividend and can only be transferred to family members. As a result, there is no re-sale value and doesn't even help the shareholders gain an advantage on the long waiting list for season tickets. NFL rules also prohibit the shareholders from betting on games. The only practical perks for the shareholders are voting rights and the rights to attend annual stockholder meeting in the summer.

Yet despite these restrictions, Packers fans rushed to own part of the team when the offering began on Tuesday. During the first 11 minutes of the offering, 1600 shares were sold. Packers hope to raise $22 worth of stocks before the offers closes next February. The greatest value is the claim of partially owning the franchise. It's this sentimental value, not monetary incentives, that motivates the fans to "invest" money into their team, and the benefits in the form of larger stadium, will help to benefit the fans themselves.

Green Bay is unique among all North American professional sports franchises. With a population of only around 300,000 in the metropolitan area, it by far has the smallest local fan-base. Nevertheless, Green Bay Packers have remained loyal to the Wisconsin city, over 100 miles north of Milwaukee, since its founding. Public ownership has helped that trend, but certainly the success of the Packers has allowed such passion. The Packers have won more Super Bowls than any other franchises, most recently in 2011. With a perfect 12-0 record heading to this week, it is aiming to go back where they were.

Similar small-town professional franchises have not fared as well. NBA's Sacramento Kings recently considered moving to Anaheim to provide more financial stability for the struggling team. While ideas were never proposed, it seems unlikely that Kings, which has fared poorly for most of the latter half of the past decade, could've generated much revenue from stock offerings.

Certainly, America continues to embrace its professional sports franchises, and most teams have very loyal fan-base in their hometown. Even in Cleveland, where teams haven't fared well in recent years, loyal fans bought their personalized bricks at the Heritage Park in Progressive Field, to be part of the history of the Cleveland Indians. In the turn of events this year that saw labor strikes in NFL and NBA, teams could consider selling part of the ownership to the devoted fan-base. It would strengthen the stability and presence of the team in the area while sustaining financial growth.

Avid sports fans flock to stadiums or ESPN to follow their passion, but at the end of the day, money and sports can't be separated. Franchises operate to maintain financial growth. Fans pay to see their teams succeed. Offering partial ownership of the teams to the public could be the link between the two sides.

Sources:

• http://online.wsj.com/article/SB10001424052970204903804577082524238902912.html
• http://www.csmonitor.com/USA/Latest-News-Wires/2011/1206/Green-Bay-Packers-stock-goes-on-sale-receives-mixed-feelings
• http://blogs.sacbee.com/sports/kings/archives/2011/05/kings-announce-1.html

Response to "Some Asians' college strategy: Don't check 'Asian'"

By now, I'm sure most have read the article that was posted on Yahoo and circulated massively on Facebook. For those who haven't, a article published yesterday details a strategy used by half-Asians on the college admission process to not reveal the Asian background of the candidate. The argument stems from the notion that Asians are held to a higher standard in the process, and thus, the chances of enrolling is higher without the Asian tag. Supporters of this claim have the numbers on their side. In the most vivid example, UC Berkeley is more than 40% Asian, but before a law was passed to forbid considering race in the admission process, the same count was only about 20%.

As a value judgement, there may be no consensus on the practice of affirmative action. Proponents cite the increased diversity; critics cite the indirect discrimination. Similarly, as a value judgement, there may be no consensus on the strategy of checking only one ethnicity for a student of multiple backgrounds, simply to boost the chances of admission. It isn't completely incorrect that the half-Asian students cited in the story are "white," but nor is it completely correct that they are only "white."

Yet here is something that hopefully can draw some consensus. Which college one ultimately gets admitted into and attends isn't all that matters. It is true that graduates of more prestigious schools have higher starting and mid-career salaries, on average. They may have more access to resources and opportunities, on average. However, that says nothing about how a particular student will exactly perform. Those who work hard and take advantage of available, despite scarce, resources will likely perform better in the future than those who put little devotion into anything and don't take advantage of multitudes of available resources.

Why do people go to college in the first place? More likely than anything else, students choose to go to college for better employment options for the rest of their lives. On that note, or even by other reasons, there are thousands of successful graduates from "non-prestigious" schools and thousands of unsuccessful graduates from "prestigious" schools each year. There isn't any magic or rocket science in the results. While it's understandable that high-school students try all types of strategies to get into the college of their dream, it's even more crucial to keep in mind that which college one gains acceptance into, isn't as crucial as how one might perform there. It's better to go to a "mediocre" college and get the most out of it, rather than go to a "top-notch" school and get little out of it. It's an individual decision and outcome, but an important remark in a society obsessed with the admission process.

Sources:

• http://news.yahoo.com/asians-college-strategy-dont-check-asian-174442977.html
• http://www.payscale.com/best-colleges/top-us-colleges-graduate-salary-statistics.asp

Response to Siri Controversy

Last weekend, I was trying out Siri for the first time and asked the question of "how do I get from Cleveland to New York?" I already had a plane ticket booked for the next day, but I wanted to see how the voice software would respond. To my dismay, I was told "sorry, I can't help you find flights." First of all, where came the assumption that I automatically was looking for a plane ticket? And furthermore, while a quick Google search would bring numerous results, why couldn't Siri find an answer for me?

Recently, it has hit the headlines that Siri can't help users find abortion clinics. This issue seems to have so much salience for abortion groups, that American Civil Liberties Union even launched an online petition saying that "if Siri can tell us about Viagra, it should not provide bad or no information about contraceptives or abortion care. Send a message to Apple: Fix Siri." In response, Apple claims that the omission is not intentional. An Apple spokeswoman stated the omissions aren't meant to offend anyone, but rather "that as we bring Siri from beta to a final product, we find places where we can do better and we will in the coming weeks."

Even if Siri moves away from its beta stage, it's highly doubtful that it will always find what users want, given the limitation of artificial intelligence. From finding restaurants to voice calling, Siri could be quite helpful. But it's not meant to do everything. To balance its usefulness and convenience, it needs, like all other software, a limitation. So far the public knows little of Apple's development behind Siri. Why can't it find flights, when it's easily done on a Google search, just like a restaurant search? Such function must not have been part of Siri's predefined capabilities. But for airline companies to claim that Siri and Apple are against those industries far bends the argument toward exclusive, self-motivated interests.

On a more practical note, those wishing to find abortion clinics could simply Google search for abortion clinics on the iPhone. It would take around a few more seconds to type out the search. It's not that those angry at Siri are unhappy at the inability to find their solutions. It's their discontent at the technology to not include their interests in the limitation of capabilities of the software. Software is as useful as its capabilities. Just like how a spell-check cannot detect all flaws, Siri is not meant to do everything. Only when can people understand that technology has definite limitations, will new software truly be appreciated for what it can offer.

Sources:

• http://www.cnn.com/2011/12/01/tech/mobile/abortion-clinic-siri-iphone/index.html?hpt=hp_bn6
• http://news.yahoo.com/apples-siri-irks-abortion-rights-advocates-231159078.html

Stock Market Recap

On Wednesday, the Dow increased by 490 points, the largest increase since March 2009, when the Dow hit its low point during the financial crisis. When the index closing at 12045.68 for the month, it showed an 0.8% increase in the month of November, and up 4% for the year. Three key developments led to the tremendous growth observed.

First, banks around the globe announced a coordinated plan to make US dollar funding cheaper for European banks. The announcement was well received in European markets, where the German index DAX jumped nearly 5%. However, this move "did not address the fundamental financial problems threatening the survival of the European currency union." Instead, it seemed more of a temporary move extend more time to Europe to plan its efforts on the preservation of the euro. Governor of Japan's central bank was quoted in saying that "the European sovereign debt problem will not be solved only with liquidity." Instead, what actions taken as crisis response will be crucial.

In other developments that contributed to the rise in markets on Wednesday, China indicated that it would loosen monetary policy by lowering the reserve ratio by 0.5% for banks, thereby enabling the increases in banks' lending activities. Lastly, private-business hiring increased by over 200,000 in November, well ahead of economic forecasts in the largest monthly gain this year.

Sources:

• http://online.wsj.com/article/SB10001424052970203833104577069782912816156.html?mod=WSJ_Markets_LEFTTopStories
• http://www.nytimes.com/2011/12/01/business/central-banks-move-together-to-ease-debt-crisis.html

Uptown Loop Biking Adventure

Going southbound, Harlem River Greenway ends at 155th Street, and it's not until around 125th Street that East River Greenway begins. Even the East River Greenway doesn't continue all the way down. The East Side certainly is not yet up-to-date in fixing biking lanes. The Uptown Loop, therefore not a true loop of Uptown, turned out like this:

• Hudson River Greenway northbound
• Dyckman Street eastbound
• Harlem River Greenway southbound
• Frederick Douglass Blvd southbound
• West 119th Street westbound

The only true uphill challenge was on the Hudson Greenway right after passing GW Bridge. Sections of Dyckman St contained no biking lane, as was the entire way of Frederick Douglass Road. Starting and ending at Columbia, it's about a 12 mile loop.

Source:

• http://www.mapmyride.com/routes/view/58422152

NBA and MLB: A Tale of Two Labor Negotiations

Two of America's major professional sports league - National Basketball Association and Major League Baseball - are headed along two divergent routes of labor negotiations. The NBA is been on the lockout since July 1st, and the season, which already has been cut short by over 300 games, seems to be on even more jeopardizing route. The latest proposal of 50-50 revenue split between players and owners was rejected on Monday, and two antitrust lawsuits were filed on Tuesday. Meanwhile in baseball, given the progress of the negotiations, few even seemed to realize the expiration of the current contract in December. Recently, new five-year collective-bargaining agreement passed. Noteworthy changes include new restraints on draft spending, transition of the Houston Astros to the American League to establish two 15-team leagues as the franchise was purchased by Jim Crane, and addition of another wildcard playoff spot in each league.

Not everyone is happy over the deal. In Houston, some angry season-ticket holders expressed that they will no longer be renewing, as transition into the American League will alter the style of National League playing the team has been accustomed to. Several General Managers didn't like the limit of spending on drafting. Even the addition of the extra playoff spot doesn't even please everyone; some note that this will only favor the inclusion of strong AL East teams into the playoffs.

Despite these differences, "the players and owners at least understand that no issue is big enough to bring down the entire sport." Compromise is the key essential for both sides to prosper. Both the players and owners want to gain more in the deals, but the fundamental truth is that at the end of the day, only one side can gain at the expense of the other. Furthermore, without harmony, both sides lose, enormously. This Tuesday should've been the first paycheck day for NBA players. Instead, the average NBA player lost over $200,000 as a result of the stalemate. With over 300 and counting games canceled, those economically hurt aren't just the league owners and players. From bars to parking lots around the venues, the local economies have also suffered greatly.

The best approach is negotiation with the mindset that an ultimate solution between the two parties is imperative. When one or both sides begin to feel that losses are fine and allow strikes to unfold, the devastating effects begin to spread, affecting more than just the two sides. It comes back to their responsibility to soon realize that the current short-term losses will only continue to bleed, and to ultimately propose a compromise that restores America's pastime and economy.

Sources:

• http://msn.foxsports.com/mlb/story/new-labor-contract-shows-bud-selig-learned-lesson-111711
• http://www.google.com/hostednews/ap/article/ALeqM5iOEfwc7ypNv9lhOtstScTVDadhAg?docId=2538d484e3f847adbd48023cee8587f6
• http://espn.go.com/nba/story/_/id/7238632/nba-lockout-average-player-loses-220000-paychecks-arrive
• http://espn.go.com/nba/story/_/id/7247758/nba-lockout-league-briefs-owners-situation-conference-call-source-says

Response to "First Person: My $50,000 Salary Felt Like Minimum Wage"

Laura Cone, a professional writer for more than 20 years, recently published a blog entry on Yahoo entitled "First Person: My $50,000 Salary Felt Like Minimum Wage." In her article, Cone calculates that after she abandoned her work-at-home job and took on working at the office, costs associated with employment has been so high that her $25/hr wage really boils down to about $7.50/hr. After arriving at that number, Cone concludes that "[her] high paying job equaled minimum wage."

Thousands of viewer comments were left on the blog entry. Most either ridiculed or lambasted Cone's conclusion. Viewers making less than $50K remarked how they were more careful in their spendings and that Cone should appreciate her income. In particular, those who left comments pointed out that the costs associated with employment are not necessary job expenses, but rather implicit costs associated with abandoning a work-at-home job. In Cone's case of transition from working at home to at office, the decision to take the office job has enormous additional costs. From costs of childcare to extra spending to combat work stress (all of the subtracted costs Cone listed in her analysis), all of these costs represent the hidden, implicit costs of working at office. In essence, these also represent the opportunity costs of working at office, as opposed to working at home. In her blog entry, Cone "discovered [she] was not making as much as [she] thought due to hidden career costs." It is plausible that these hidden career costs may not have been fully compensated by the increase in gross income at the office job, leading to Cone's conclusion. Nevertheless, they represent opportunity costs, which is necessary for all firms and individuals to take into account for any decisions such as moving employment locations.

But more troubling for public viewers of the blog entry is Cone's comparison to earning minimum wage. As comments pointed out, those earning minimum wages need to pay for the essential living expenses - food, transportation, etc - from their minimum wage. Cone's "minimal wage" is after all of those costs have been deducted. Furthermore, Cone was even "reimbursed mileage during the workday, but had to eat my commuting costs." Most employers for private companies don't even get reimbursed for mileage and the gas costs also come from their gross income. Lastly, some of the "career costs" Cone listed are luxuries that those earning true minimum wages would not be able to enjoy. For example, Cone wrote that she needs $40 per week on clothes; while this number may not seem outright lavish, she takes into account spending that amount for clothes, every week. What does indeed sound outright lavish, are what Cone says she needs to "combat work stress." She "needed to take expensive vacations just to unwind" and began "getting weekly massages." Citing that she now has "less time and more to juggle" (while working only the typical 40 hours/week), Cone "paid for someone to mow [her] lawn and clean [her] house." None of these luxuries are opportunities that those actually earning minimum wage typically enjoy.

It's understandable that people like Cone spend more for certain goods as her style of employment became more demanding. There's where the adage comes that "money buys happiness." However, it's not acceptable that implicit costs of career are counted under work expense; they are rather opportunity costs of making the transition from working at home to office. But more importantly, particularly in this economy of high unemployment and decreased real wages, associating these luxuries as work expenses, and drawing parallelism with earning minimum wage, after she indulges in the luxuries, is highly insensitive to those who indeed earn a gross income of minimum wage.

Sources:

• http://shine.yahoo.com/work-money/first-person-50-000-salary-felt-minimum-wage-194000717.html

Improvement in Markets

In a week that saw tumultuous variations in the stock markets given the events in Europe, stocks closed the week with more optimistic outlooks, with the Dow closing at 12,133.82. It was helped by the news in Italy that the Senate approved budget measures. This package of austerity measures, which was demanded by the European Union, will go into vote in the lower house, and ultimately trigger the resignation of Prime Minister Silvio Berlusconi, who announced on Tuesday that he will step down after new economic measures are passed. The passage also lowered the Italian bond yields, which had climbed to record levels earlier this week.

Meanwhile in the United States, aside from bank shares climbing in response to the events in Italy, stocks for Walt Disney rose 6.7%, citing advertising gains and higher ticket prices for increased profit. These developments come one day after the Labor Department announced that the number of people applied for unemployment claims fell to a seasonally adjusted 390,000 last week, the lowest levels since April. While this is an encouraging signs, it's still not at a level to sustain job gains. The outlook in Europe continues to worry Americans, as the debt crisis could push Europe into a recession and hurt American exports.

So while the stocks closed the week on a high note, caution is still needed to claim true progression, as this week's events show the high volatility in the markets in response to global developments.

Sources:

• http://moneyland.time.com/2011/11/11/unemployment-claims-at-7-month-low/
• http://www.bloomberg.com/news/2011-11-11/u-s-index-futures-rise-as-decline-in-france-italy-yields-eases-concern.html?cmpid=yhoo
• http://news.yahoo.com/italy-senate-votes-berlusconi-era-nears-end-124922616.html

Berlusconi to Resign

On Tuesday, Italian Prime Minister Silvio Berlusconi announced that he will resign after parliament approves economic reforms. The announcement comes after Parliament passed a budget measure with 308 votes, but saw over half of the 630 lawmakers not taking part in the vote, a vivid indication that Berlusconi no longer has the support of a majority in Parliament.

Italy has the third largest economy in the eurozone and eighth largest in the world. Struggling European countries like Greece, Ireland, and Portugal already had to be bailed out. Although currently solvent, Italy poses a tremendous challenge with its 1.9 trillion euro debt, or about 120% of its economic output, that Europe can't afford to bail out. The Italian bond yield reached 6.77% on Tuesday, dangerously approaching the 7% mark that prompted bailouts for Portugal and Ireland.

In the United States, the news of the impending resignation pushed Dow up 101 points to close at 12,170.18. Stock markets in Italy, Germany, and France also rose slightly.

Sources:

• http://finance.yahoo.com/news/Berlusconi-promises-to-resign-apf-3530821317.html?x=0&sec=topStories&pos=2&asset=&ccode=
• http://edition.cnn.com//2011/11/08/world/europe/italy-economy/index.html
• http://finance.yahoo.com/news/Stocks-rise-after-Berlusconi-apf-803223079.html?x=0&sec=topStories&pos=4&asset=&ccode=

Columbia ↔ Upper Nyack Biking Adventure

Route 9W, starting at George Washington Bridge in New Jersey and continuing northward, is popular with cyclists riding through Bergen County and counties in New York state on the west side of Hudson River. However, the route is quite hilly. A series of steep downhills are experienced going northward near the NJ/NY border, and steep up- and down-hills are experienced along the village of Nyack. The route continues all the way upstate to Albany, but I stopped and turned around somewhere along the route in Upper Nyack. The summary of the trip as follows. Besides the portions of the trip in Manhattan, the entire trip stays within the west side of Hudson River.

• Columbia University
• George Washington Bridge
• Northbound on 9W, passing through in Bergen County: Fort Lee, Englewood Cliffs, Tenafly, Alpine
• Enter New York and passing through in Rockland County: Palisades, Piermont, Nyack
• Ride past, but don't cross Tappan Zee Bridge
• Return on same route

Stock Market Recap

On Wednesday, the Dow gained 178.08 points, after losing 573 points over the two previous days over the closure of MF Global and situation in Greece. MF Global, a global financial derivatives broker, filed for Chapter 11 Bankruptcy after making a massive leveraged bet on European debt. In Greece, Prime Minister George Papandreou put a referendum over a debt bailout for the nation, which took months for European countries to broker. If voters reject the referendum, a default could result from Greek debt, leading to massive losses for banks holding Greek bonds. Papandreou is scheduled to meet with G20 leaders on Thursday and Friday.

Meanwhile in the United States, private hiring increased by 110,000 in October, surpassing economic expectations. This report comes in days after the news that consumer spending increased by 0.6% in September, while income only increased by 0.1%. These signs of improved confidence were encouraging and aim to allay fears that the United States is on the verge of another recession. Most of the jobs added in October were from the service sector, and investors hope for similarly optimistic news for Friday's broader employment report.

Despite Monday's drop, Dow posted 9.6% gain in October, the best one-month performance since 2002. However, the significant drop over Monday and Tuesday still illustrates the vulnerability and volatility of the market given the circumstances in Europe.

Sources:

• http://finance.yahoo.com/news/Stocks-recover-after-a-twoday-apf-2155362811.html?x=0&sec=topStories&pos=9&asset=&ccode=
• http://online.wsj.com/article/SB10001424052970203716204577013481570347606.html?ru=yahoo&mod=yahoo_hs
• http://www.ft.com/cms/s/0/14601a1c-0167-11e1-ae24-00144feabdc0.html?ftcamp=rss#axzz1cbmeJDIT
• http://www.news-press.com/article/20111101/BUSINESS/111010360/October-surprise-Dow

7 Billion and Counting

The United Nation estimated that human population reached 7 billion on Monday. It was only 12 years ago that the world reached the 6 billion mark. The Chair of NGO Population Matters Roger Martin recently remarked that "every additional person needs food, water and energy, and produces more waste and pollution, so ratchets up our total impact on the planet, and ratchets down everyone else's share." On the other hand, 7 billion may be an enormous but somewhat graspable number. If 7 billion people fitted into Texas, the population density would only be as great as that of New York City.

It is true that population growth has curbed significantly in recent decades. The average number of children per women is currently 2.5, down from figure of 5 observed in the 1950s. The current population growth at 1.1% is half the peak value in the 1960s. The tempered growth rate "enables families and societies to focus on the well-being of their children rather than the quantity."

The recent figure also shows that there's a high correlation between country's wealth and population growth. Countries like Japan struggle to keep up with a declining population, but many Sub-Saharan African countries, women may be having five or more children on average. The disparity becomes significant when the resource usage is accounted for. Industrial countries, accounting for 20% of the world population, account for 80% of the accumulated carbon dioxide in the atmosphere. Furthermore, the average carbon dioxide emission per person is 19.9 tons per year, while in Kenya, the figure is 1.2 tons per year.

As a result, the focus may be two-fold. Quality of life should be addressed in the low-income countries to curb the massive population growth. At the same time, they consume so little compared to high-income countries. While the 7 billion mark may draw much attention to issues of sustainability, the world shouldn't be alarmed. The planet is capable of producing enough food; however, it's not always getting to those in need. 50% of the food Americans buy get thrown away. At the same time, it is difficult to transport and utilize that resource to the 1 billion people who go hungry around the world.

So the rising population is indeed a concern. But trying to curb the growth at the locations with the highest growth rates isn't quite the solution, for those areas consume little resources. As for resources, it's not that the world can't produce enough for the pending population. As the world slowly awaits for the next mark, the true challenge rests in transferring the excess capacity to areas where it becomes the necessity.

Sources:

• http://www.time.com/time/specials/packages/article/0,28804,2097720_2097782,00.html
• http://www.guardian.co.uk/environment/2011/oct/24/population-hysteria-damaging?newsfeed=true

October Miracle

Related previous posts: Historical September Collapses, October Surprises

This is nothing short of historical and utterly magical. The St. Louis Cardinals won the World Series Friday night after defeating Texas Rangers in Game 7. Two months ago, this seemed as about as unlikely as one could get. Here's all that happened for the Cardinals to win it all.

• Stood 10½ games out of the final playoff spot with 31 games to play
• Stood 8½ back with 21 to play
• Stood 3 back with 5 to play, and needed the Phillies to sweep the Braves in the final games of the regular season
• Defeated the Phillies, which won 102 games in the regular season, and the division rival Brewers in first two rounds, both times without home-field advantage
• Down 3-2 in the World Series after 5 games, needed to win 2 consecutive games at home
• Rallied from being down to their last strike, twice, in back-to-back inning, during Game 6 to win against Rangers

No previous instances in sports history can parallel the miraculous accomplishments of the 2011 St. Louis Cardinals. In the voice of Outfielder Allen Craig, "It's history. Our whole ride to the playoffs. Just what we did to get here. It's improbable. It's unbelievable. All I can say is, we did it."

Sources:

• http://espn.go.com/mlb/playoffs/2011/story/_/id/7163079/2011-world-series-st-louis-cardinals-complete-impossible-dream

Staten Island: Highest Per Capita Road Tolls

Residents and visitors of New York City continuously face higher toll fees compared to the rest of the nation. While the southbound toll on Golden Gate Bridge is $6 for cash users, fees on any of the eastbound Hudson River crossing recently increased to $13 for cash users. In 2000, while the United States collected $6.6 billion in tolls, $2.0 billion came from New York state alone, while $711 million came from neighboring New Jersey. While tolls can be burdensome for commuters and tourists, nowhere is the burden heavier than on Staten Island, the city's "forgotten borough."

First, consider the tolls on bridge and tunnel crossings into Manhattan for standard cars. Note that fees vary depending on the timing and other circumstances (E-ZPass and residency discounts). Let's just consider peak-hour fees for cash payers without residency discounts, the worst-case scenario. For entering Manhattan:

• George Washington Bridge, Lincoln Tunnel, Holland Tunnel: $12
• Henry Hudson Bridge (crossing Harlem River): $4
• 9 other Harlem River crossings: free
• RFK Bridge, Brooklyn-Battery Tunnel, Queens Midtown Tunnel (all crossing East River): $6.50, although tolls are charged in both directions
• Brooklyn Bridge, Manhattan Bridge, Williamsburg Bridge, Queensboro Bridge (all crossing East River): free

Now under the same conditions, for entering Staten Island:

• Verrazano–Narrows Bridge: $13
• Bayonne Bridge, Goethals Bridge, Outerbridge Crossing: $12

Not only are the tolls on bridges coming into Staten Island more expensive on average, but there are also fewer (none, to be exact) alternatives. New York state collects about $105 in road tolls per person each year, which is over four times the national average of $23.45. But the burden is even more concentrated in Staten Island, which pays nearly $293 per person. The effects aren't just felt by the residents. Staten Island suffers competitive disadvantage, as business location decisions are largely influenced by tolls.

While some may point at the free Staten Island Ferry to Manhattan, public transport is still more inconvenient for commuters and impractical for businesses. The ferry completes the 5+ mile journey in around 30 minutes. Furthermore, the Staten Island Railway (SIR) only has one line situated along the southern portion of the city. With a population of nearly 500,000, Staten Island would be a mid-sized city in the country if separated. However, its 14 miles of rail service is shorter than service in a smaller city like Cleveland. The situation is not improved when residents remember that they are officially part of New York City, which boasts the nation's most sophisticated rail network. As a result, more residents have turned to cars, but they then face the highest per capita toll in the nation. The transportation situation in Staten Island strongly reinforces the mindset of its residents that they are part of the "forgotten borough" of the city.

Sources:

• http://www.cunyspsc.org/files/papers_o/p_TRA_2010_SI_Toll_Burden_White_Paper_v3_o.pdf
• http://www.mta.info/mta/pdf/approved_bandt_tolls.pdf
• http://www.panynj.gov/bridges-tunnels/tolls.html

Booming Growth yet Homelessness in North Dakota

Related previous post: Economic Growth in North Dakota

North Dakota is back on the news again with its strong economic growth. With the recent discovery of ways to tap the oil fields around Bakken Formation, demand has been high to hire not only skilled labor in the field, but also people from all sectors of the industry necessary to support the infrastructure of the business. From restaurant waiters to truck drivers, companies have not only been seeking to hire multitudes, but also offering lofty compensation in hope to entice people to come to oil boom-towns like Williston, ND to work. Truck drivers can make an average of $70,000 to $80,000 a year, and some fast-food restaurants have double their wages. While the numbers certainly look great, there is a severe shortage of lodging in the area. Where six-figure salaries are offered, homelessness has become a burden.

In order to sustain this economic growth, adequate housing is necessary to sustain the population growth. Unfortunately, the pace of housing has not caught up to the pace of jobs. Only about 2,000 new housing units have been built in the past year. Fortunate people have found space in "man camps" that the oil companies have built. But many have resorted to desperate measures to lodge in their cars, claiming parking lots as their street addresses. The situation is far from ideal, but the lucrative pay nevertheless has drawn many willing to sacrifice basic living conditions.

There have been efforts to invest in this area. First Millenium Construction is building a 500-person man camp in Watford City. Jarvis Green of the company expects a "200% to 300% return on the multi-million dollar investment." The investment opportunity certainly looks bright, as the discovery and the growth around Bakken Formation have only recently begun . But while the real estate growth currently lags behind the influx of people looking to take advantage of the boom, people in the oil-towns of North Dakota live within a seemingly incongruous juxtaposition: economic prosperity and homelessness.

Sources:

• http://finance.yahoo.com/news/Americas-Boomtown-North-cnnm-1424053087.html
• http://money.cnn.com/2011/09/28/pf/north_dakota_jobs/index.htm?source=yahoo_hosted

Global Airline Industry: Growth or Decline?

Recently, it was announced that economic growth in China has been slowing down as the government has taken measures to control inflation. During the third quarter, the economy grew at 9.1%, down from previous quarter's 9.5%. This has caused concern as China is the main exporter of goods to the West and area of development for many Western companies. This is particularly true for the airline industry, as rising development has led to more demand of aircraft in the region. This week, it was revealed that China Eastern airline has canceled its order of 24 Boeing 787 Dreamliner planes, citing the withdraw "due to Boeing Company's delay in delivery," rather than any economic slowdown indications. What is the forecast of airline industries given these two recent events?

After the announcement by China Eastern, Boeing remained optimistic. A Reuters article quoted Marketing VP Randy Tinseth in his statement that "as we look forward, we expect to see the Dreamliner order base increase, we expect to see more orders, we expect to see more cancellations, especially as we go through mitigation with our customers." While the development may put more pressure on Boeing to hasten its production rate to its target of 10 units per month by 2013, the outlooks seem promising in other markets. Australia's Qantas Airways, Korean Air Lines, and other Chinese airlines such as China Southern, have all remained committed to introduce the Boeing Dreamliner.

Long-term forecasts may be even more promising. According to Tinseth, "air travel in Northeast Asia is expected to grow moderately at 4.3 percent annually over the next 20 years." Indeed across the emerging markets, the demand for aircraft will remain strong for the next decades to come. Even with China's slowdown, the growth is still hovering at around 9%, compared to that of United States of Europe, which hovers between 1 to 2%. According to Parker Hannifin Chairman and Chief Executive Donald Washkewicz, China's downward trend has "been a short-lived thing and activity picks up again." The optimism is voiced through Boeing, which forecasts 33,500 new aircraft by 2030.

Despite given the recent reports of China's slowdown with its economy and the cancellation of 24 Boeing Dreamliner units by China Eastern, it looks as though that the global airline industry will see growth in the immediate future.

Sources:

• http://finance.yahoo.com/news/China-Eastern-cancels-order-apf-3003985708.html?x=0&sec=topStories&pos=8&asset=&ccode=
• http://www.reuters.com/article/2011/10/18/uk-boeing-sees-more-dreamliner-cancellat-idUSLNE79H01X20111018
• http://www.militaryaerospace.com/index/display/article-display/3775674597/articles/avionics-intelligence/news/2011/10/boeing-predicts__200.html
• http://www.marketwatch.com/story/emerging-markets-boost-us-aerospace-2011-10-19?siteid=yhoof
• http://www.bbc.co.uk/news/business-15331523

Is China Getting Richer?

People these days often hear about China's economic growth and its enormous impact on the global economy. Yes, China contributed 19% of the world's economic growth in 2010, and that figure is expected to increase to 24% this year. Western companies have invested in China to stay competitive in one of the world's fastest-growing market. This Tuesday, Boeing announced that it officially opened a service center in Beijing. China's travel is expected to grow annually at 7.6% over the next 20 years, and Boeing, which already has 800 of its airplane units in Chinese airlines, hopes to maintain the company's majority share of the market of commercial airlines in China.

But is this really indicative of China getting richer? A recent New York Times article argues that while its economy experiences rapid growth, China sees its households struggling to keep up, as those making more than the average usually save most of their earnings. While the US saves roughly 5% of the disposable income, that figure approaches 40% in China. Various factors, from depressed wages and soaring home prices, impel the Chinese to save. However, the interest rate on saving accounts are artificially low, not able to keep up with the rising inflation rate. As a result, consumption levels are low. Those who benefit from the savings are state institutions, fueling the rise of real-estate developers and government spending on railroad. As for the commoners, they have little choices. Many wish to avoid investing in the volatile stock market, and laws restrict the ability to invest overseas.

The most convenient outlet for many Chinese then, became the real estate market. Compared to the same period a year ago, Chinese investment in real estate was up 32.9% during the first half the year. Real estate prices have overall tripled in the past five years. Many have been concerned about the effects of a housing bubble burst. This is a legitimate concern for the United States, as China's growth is crucial for the multinational companies investing there; United States sold $92 billion in goods and services to China last year. But the focus still hasn't been on domestic consumption. So far, much attention has been focused on cheap land and capital for heavy investing. The soundness of the Chinese economy will need to depend on how the households can spend, not just the state corporations.

So is China getting richer? It depends on from what perspective one looks at. Is the GDP growing? Yes. Are foreign investments increasing? Yes. But are the average household better off? As ambiguous as the question may sound, the answer may just be "not exactly."

Sources:

• http://online.wsj.com/article/SB10001424052970203499704576624942566500046.html
• http://www.nytimes.com/2011/10/10/business/global/households-pay-a-price-for-chinas-growth.html?pagewanted=2&_r=1
• http://www.time.com/time/magazine/article/0,9171,2096345-2,00.html

Apple's Strategic Release of iPhone 4S

When Apple announced the debut of the iPhone 4S last week, disappointment was prevalent, as many looked forward to the release of iPhone 5. But iPhone 4S was a success. Over a million units of the phone was preordered in the first 24 hours of opening. This toppled the record held by the iPhone 4, which saw over 600,000 preorders in the first 24 hours. This time around, the numbers are greater as Sprint joined the group and also sold the phone under its carrier. But the numbers show that clearly, iPhone 4S was not a disappointment.

The judgement of who would actually buy the new iPhone was crucial in the launch of the iPhone 4S, rather than the iPhone 5. Most users of the current iPhone 4 are still under the two-year contract plan, signed around mid-2010. So Apple wasn't even targeting those users hoping to upgrade their phones. In fact, to the 70 million users of iPhone 4, Apple hoped that this wouldn't a spectacular upgrade, so not to disconcert them in being stuck to another year of contract. Instead, Apple hoped to entice users of iPhone 3G and iPhone 3GS users with a huge contrast to their products. At the same time, by making the iPhone 3GS free, Apple also hoped to entice new users to the smartphone market.

Various analysis have predicted that Apple will shatter its own records in the number of iPhone 4S units sold this quarter. That's not bad considering the initial disappointment it received after the showcase of its newest product. Consumers can only guess what will happen when Apple is most likely going to release the next generation of iPhone next summer.

Sources:

• http://finance.yahoo.com/blogs/daily-ticker/now-why-apple-launched-iphone-4s-instead-iphone-154636512.html
• http://techland.time.com/2011/10/11/at-least-one-million-people-want-apples-iphone-4s/

October Surprises

During the regular season, New York Yankees won 97 games, and Philadelphia Phillies won 102 games. Yet even with the home-field advantage, neither team was able to advance out of the first round of playoffs, falling to the Detroit Tigers and St. Louis Cardinals, respectively. The Cardinals, if one may recall, miraculously capped their run and got into the playoffs on the last day of the regular season. They faced the Phillies, who sent former Cy Young winner Roy Halladay to the decisive Game 5 on Friday. Yet the Cardinals pulled it through. Cardinals starter Chris Carpenter simply out-pitched his old former teammate on a 3-hitter.

Surprise throughout the sports nation and disappointment along the East Coast? Certainly. Coming in with high expectations, teams like Yankees and Phillies wanted nothing short of a championship. Yankees president Randy Levine recently said that without winning the World Series, the season "is a bitter disappointment and not a successful year." Similar sentiment is inevitable in Philadelphia, which immediately became everyone's favorite to win the World Series this year when Cliff Lee resigned with the team, boasting inevitably the best rotation in the League. The prediction continued throughout the season, as Phillies boasted the best record in the League from April to September.

But this is the realm of sports, where anything can happen. The Cardinals can climb from their historical September rally into the playoffs, and knock out the all-mighty Phillies in the first round. What happened in the 162 games of regular season is only an indication. Indications can predict, but not ascertain any results.

Sources:

• http://sports.espn.go.com/mlb/recap?gameId=311007122
• http://espn.go.com/new-york/mlb/story/_/id/7071773/2011-alds-new-york-yankees-randy-levine-says-season-failure

Livery Cab Bill Debate

Yellow taxis have become an icon of New York City, but their concentration around central Manhattan and the airports is undeniable. Many have complained that it's nearly impossible to catch a cab elsewhere in the city, and it's not difficult to note the paucity of the yellow cabs in the so-called outer boroughs. Currently, only yellow cabs are authorized to pick up passengers on the street who hail for service. To address this issue, a bill has been sitting at Governor Andrew Cuomo's desk that would authorize livery (black) cabs to pick up street hails in the outer boroughs. Currently, livery cabs pick up passengers on pre-arranged trips.

Aside from the access issue, proponents argue that this would generate millions for the city. Currently, drivers of the traditional yellow cabs spend hundreds of thousands of dollars to buy medallions, their exclusive right to pick up street hails within the city. By extending these medallion permits to livery cabs, "the tax revenues ... would be something like a billion dollars into the city’s budget," Mayor Bloomberg remarks.

Opposition comes from current yellow cab drivers, who argue that by leasing the right to pick up street hails to livery cabs, the value of their own medallions will be vastly diminished. On Tuesday, hundreds of cab drivers protested outside Governor Cuomo's office, urging him to veto the bill that would allow the livery cabs' operations. Furthermore, oppositions argue that "livery drivers in the outer boroughs would ignore prearranged pickups in favor of street hails."

Governor Cuomo has remarked that “the optimum goal is to design a plan that provides taxi access to the outer boroughs, access to the disabled, revenue for the city, and respects the medallion franchise.” The root cause of the problem is the current lack of cabs in outer boroughs. This disproportion is vividly illustrated by the fact that while 80% of the city's population lives outside Manhattan, 97% of the pickups are in central Manhattan or at the city's two airports, according to GPS data collected by taxi commission.

Most yellow cabs drivers stay within the airports and central Manhattan, where the demand for the cabs is the greatest. The situation is a microcosm of game theory practice. Each driver's dominant strategy is to stay in these hot-spots, for they're more likely to earn more revenue. However, if most drivers practice this method, all of them may be worse off, given that government intervention may deal with the lack of cabs in outer boroughs, through measures like authorizing the livery cabs, which would indirectly devalue all cab drivers' medallions. To settle this uneasy dilemma, an equilibrium needs to be sought that balances the desire of cab drivers to serve hot spots for more revenue, and the access for outer boroughs for citizens there. Within outer boroughs, secondary hot spots can be identified, including trains stations, shopping malls, sports venues, and other popular places. Monetarily incentives could be given to yellow cab drivers to pick up passengers from these "secondary hot spots" in the outer boroughs to compensate for their service in these less-profitable regions. This internal solution, if operational, may eradicate the need for external livery cabs and their rights to pick up street hails in the outer boroughs.

Sources:

• http://newyork.cbslocal.com/2011/10/04/cabbies-rally-against-livery-cab-bill-outside-gov-cuomos-nyc-office/
• http://newyork.cbslocal.com/2011/09/28/drivers-rally-outside-cuomos-office-calling-on-gov-to-sign-livery-cab-street-hail-bill/

Kindle Fire Pricing

When Amazon unveiled the $199 tablet computer Kindle Fire, people began speculating that a rival product to Apple's iPad, whose cheapest version is $499, has finally arrived. Indeed, at $300 or 60% cheaper, Kindle Fire, which may lack some of iPad's functionaries, seem to be somewhat of a bargain. News came out today that Amazon might actually be losing money for each unit of Kindle Fire sold. Although estimates vary, the estimated cost put into each unit of Kindle Fire is about $210. Amazon would need to sell $10 of other goods, such as music or apps, just to break even.

Predatory pricing may be the strategy Amazon is going after. By intentionally charging a lower price, the firm hopes to entice customers. When the item is sold, also carried along is the brand name of the product and other related product. Amazon already has a huge presence in the market, and has a huge inventory of items ready to be sold, that may be compliment products to the tablet. By tying the goods together, Amazon may be hoping that the lower pricing on Kindle Fire may draw customers to buy more of its other goods. Indeed, compared to other Android competitors, "the real benefit for Amazon in entering the tablet space is the advantage of a direct, established, sales model on Amazon.com."

Sources:

• http://techland.time.com/2011/10/03/amazon-might-lose-money-on-each-tablet-and-why-it-doesnt-matter/

Columbia ↔ Coney Island Biking Adventure

Situated about 20 miles away from campus of Columbia, Coney Island certainly is a good destination for a half-day biking trip, to get to see the suburban portions of the city and head to the beach. The route for the return portion of the trip was slightly altered to see more different aspects.

Columbia → Coney Island

• Hudson River Greenway: from Riverside Drive, enter from W 103th Street and head down to the lowest level, where the biking route sits next to the river
• Warren Street: eastbound crosstown road at the tip of Manhattan
• Brooklyn Bridge: the only borough crossing of the trip
• Prospect Park: follow various biking routes after bridge crossing to enter the park
• Ocean Parkway: cross through the lettered avenues of Brooklyn until the destination; this section has a highly suburban feel

 Coney Island → Columbia

• Shore Parkway Greenway: somewhat difficult to find the entrance, but this route sits next to the Lower New York Bay, with good views of Staten Island and Verrazano Bridge; also spotted along this section is something of a rare sight in Manhattan: parking lots next to stores
• 4th Avenue: the Greenway terminates at around 69th Street, so the northbound return journey continues
• Manhattan Bridge: upon reaching Downtown Brooklyn, follow through various signs to find the entrance to the bridge
• Prince Street: westbound crosstown road; highly congested route
• Hudson Greenway: head back up to Morningside Heights

Who is Dan Johnson?

"He’s not even the 25th man on the Tampa roster. He’s more like the 32nd or 33rd or 34th man." Coming up to bat at the bottom of 9th inning, with his Tampa Bay Rays down 7-6 on the season's finale, with Red Sox ahead at the time and the season on the line, Johnson was hitting an abysmal .108 in 83 at-bats, including zero hits in all of September. Johnson quickly got down in the counts with one ball and two strikes. But the next changeup from Yankees' Cory Wade traveled down the right-field line and over the wall. Suddenly, Rays have come back from a 7-0 deficit in the last two innings. They'd eventually win in extra inning with another homer. But it was the homer in the bottom of the 9th that tied the game and forced the extras, that first goes into the history book.

Meanwhile over at Baltimore, Boston Red Sox, looking to save its season from a historic collapse, held lead into the 9th inning. Closer Jonathan Papelbon, a 4-time All-Star, could not hold onto the one-run lead. The game's final play unfolded as Outfielder Carl Crawford, who had signed 7-year, $142-million contract with the Red Sox before the season, could not make the diving catch; the Orioles scored the winning run. They weren't able to close the game and save the season. But the little-known Dan Johnson was able to lift the Ray into the playoffs.

Indeed, this is one of the signature of sports. One just doesn't know who will be the hero at the end of the night.

Source:

• http://espn.go.com/blog/sweetspot/post/_/id/16828/rays-red-sox-and-a-night-youll-never-forget

Historical September Collapses

As weather begins to chill and October rolls, America's pastime heads into the playoffs. But what baseball witnessed this September was anything short of unbelievable. On the final day of regular season, Boston Red Sox and Atlanta Braves lost the wildcard spot after holding strong leads only earlier this season. And the fashion in which it all unwrapped today was also short of unbelievable.

On September 3rd, Red Sox held 9-game lead over Tampa Bay Rays for the wildcard. But that lead evaporated and as the day began yesterday, the teams were tied for the wildcard. Through most of the night, it looked as if Boston would wrap up the position and put a damper on their dangerous slide. They were up 3-2 as rain delay settled in the 7th inning. Meanwhile, Rays were down 7-0 against the Yankees. The Rays were down to their last strike; the Red Sox was one strike away from winning. But Rays rallied to win 8-7 against the first-place Yankees, and Red Sox managed to lose 4-3 to the last-place Orioles.

On the National League side, Atlanta Braves had 10½ games lead over St. Louis Cardinals on August 25th. Even before game on September 6th, the lad was 8½ games. But similar to slide in American League, Braves managed to lose its lead and came into the last day of the season tied with the Cardinals for the wildcard. Cardinals won its game first, 8-0 against the Astros. It was down to the Braves to save its season and force an extra game against the Cardinals to determine who wins the last playoff spot. Heading into 9th inning, Braved held onto 3-2 lead, but blew it, and finally let the Phillies score in the 13th inning to cap the ultimate collapse.

Collapses are not uncommon. But to see historical levels of collapse in both leagues, on the last day of the season, both in remarkable fashions on the last game of the season, is quite unprecedented. While collapse is one side of the equation, the final results still wouldn't be possible without the remarkable runs of the other teams. Both Tampa Bay and St. Louis played above .600 baseball to catch up the wildcard leaders. October is known for where legacies are born in the playoffs. But just as noteworthy are the remarkable stories in September that allow some of the teams to head into October baseball. From now, anything is possible. Colorado Rockies rolled their way into the final playoff spot in 2007 and went on their juggernaut into the World Series. How will the Rays and Cardinals turn out this season, after just having capped their unbelievable run into the playoff? October will tell.

Sources:

• http://sports.espn.go.com/mlb/recap?gameId=310928130
• http://sports.espn.go.com/mlb/recap?gameId=310928101
• http://sports.espn.go.com/mlb/recap?gameId=310928118
• http://scores.espn.go.com/mlb/recap?gameId=310928115

Hypothetical NYC Subway Line: Cross 125th ↔ Flushing

New York is finally getting progress on its long-sought Second Avenue Subway line. Hoping to relieve congestion on the East Side, the line is scheduled to begin operating in late 2016. It's hard to imagine any capital projects of its magnitude being implemented anytime soon. But that put offside, if there is one hypothetical line to the Subway system that could be built, it would make the most sense to construct a Cross 125th Street line through Manhattan, extending via Triboro (RFK) Bridge into LaGuardia Airport and Main Street in Flushing.

The hypothetical line would have the following stations, listed from its western terminus. Under this plan, only 1 new station (LaGuardia Airport) would need to be constructed.

• 125th & Broadway: currently 1 train, nearby Columbia University (including the future Manhattanville) campuses
• 125th & St. Nicholas Ave: currently A, B, C, D trains
• 125th & Lenox Ave: currently 2, 3 trains
• 125th & Lexington Ave: currently 4, 5, 6 trains, nearby Metro North connection
• Astoria Blvd: currently N, Q trains
• LaGuardia Airport
• Main Street, Flushing: currently 7 train, nearby LIRR connection

Residents of Upper Manhattan will feel the benefit the most. Crosstown travel is burdensome for all Manhattan residents, and there exists no crosstown rail lines north of 42nd Street. Crosstown buses, including M60 going through 125th Street onto LaGuardia, faces severe congestion and stopping. The location of 125th Street is fitting, as it is about halfway between 42nd Street and upper boundary of Manhattan. Furthermore, as it is not one-way streets, it's difficult to implement Select Bus Service lines, which have been introduced on First and Second Avenues to speed up M15 service.

The line would also relieve commuters from two major Metro North stations within the city boundaries: Grand Central and Marble Hill. Grand Central would continue to serve commuters heading to Midtown or Downtown, but the 125th-Harlem station would be able to efficiently serve commuters heading especially to the West Side of the city. Many West Side workers currently get off at Marble Hill, transfer onto the 1 line at 225th Street, and make the long journey on the local 1 line. Instead, this line would allow them to stay in Metro North until 125th and quickly transfer to lines on the West Side, greatly helping those heading into Harlem, areas like Morningside Heights or Upper West Side.

The continuation of the line into Queens serves to enhance the current services of M60, which takes variable amount of time to move from Morningside Heights to LaGuardia, one of the largest airports in the nation without rail connection on the ground. The extension into Flushing provides another outlet into Manhattan, especially Upper Manhattan, from the Main Street station, which currently is the busiest station in the system outside of Manhattan. The extension to LaGuardia has been proposed recently, but rejected when residents of Astoria expressed their disapproval. Also on practicality note, it would be a massive capital project just to construct rail lines on the Triboro (RFK) Bridge.

While this line is purely hypothetical, it does offer insight into where the current system could be most improved. Currently it is most difficult to travel crosstown, especially in Uptown areas.125th Street, with its Metro North station on Park Avenue, would have the best argument to house a new line, if it were possible. The extension of that line would also help move people easily to and from two of busiest locations in Queens.

Sources:

• http://www.mta.info/nyct/facts/ridership/index.htm
• http://www.qgazette.com/news/2003-07-16/Front_Page/002.html
• http://mta.info/mta/news/releases/?agency=mnr&en=080131-MNR7

Congestion Charge Plan in Beijing

Earlier this month, officials in the Chinese capital said that congestion fees will be introduced on some roads to combat the notorious traffic woes in the city. The idea isn't novel; some European cities already have the practice, and New York City has also considered the plan. Beijing currently has 4.8 million registered vehicles. Measures have taken to curb that growth. Since 2008, certain vehicles have been barred from the streets depending on its license plate and the day of the week. Furthermore starting January, cap has been placed on new car registrations at 20,000 per month.

The goal of the congestion fee is to encourage public transportation usage. A senior municipal official is quoted to say that "by 2015, our goal is to have public transportation handling 50 percent share of traffic volume inside the Fifth Ring Road." However, strong measures have been taken in the past to encourage public transportation usage. The Beijing Subway has enormously expanded within the last decade to climb to worldly ranks of 4th in track length and 5th in ridership. Furthermore in 2007, the fares were reduced to a flat-rate of 2 RMB with unlimited transfers. The municipal government took on the deficit to encourage public transportation usage. While ridership has increased, so has the ownership of cars with the rise of middle-class who can afford personal vehicles.

Transportation service is an inelastic demand. An environmental activist in Beijing is quoted to say that "imposing the toll itself won't change that people have to travel long distances from their homes to work." The convenience offered by cars still exceeds that from mass transit. To truly encourage public transportation usage, mass transit simply needs to be more convenient, by exploiting the pitfall of vehicle usage, congestion. If mass transit can be much faster and more reliable, it could potentially be more convenient. A key to make faster trains is to build express lines. Currently, neither the Shanghai and Beijing Metro has express lines running parallel to local lines, as they do in some parts of New York City's Subway. Instead of focusing on express, both of the Chinese cities are currently expanding lines to new areas. While that encourages more mass transit usage from outer, suburban areas, it still leaves traveling within the city center somewhat inconvenient. By investing in express lines that could take a person from Point A to Point B faster than a car could in the normally congested streets, citizens may truly see public transportation as more convenient.

For the growing middle class, money may not be the ultimate incentive. Despite higher parking prices and other costs associated with driving, they still buy vehicles in bulks and become angered when they can't get the vehicle registration under the current quota. Lowering the costs of public transportation fares may be a miniscule amount to them. Instead, making them more convenient may be the best way to tap into their incentives and get into the heart of the congestion problem in Beijing, and other crowded metropolises.

Sources:

• http://www.bbc.co.uk/news/world-asia-pacific-14761711
• http://www.chinadaily.com.cn/cndy/2011-09/03/content_13610318.htm

Maglev Ride

There was absolutely no need for me to ride the Shanghai Maglev yesterday as I headed to Pudong International Airport. There was enough time to simply take Line 2 all the way. But more as adventure, I got off the Metro at Longyang Road Station and paid 40 RMB for an one-way Maglev ticket. The 30 km journey was completed in less than 8 minutes.

Magnetic levitation operates differently from conventional rail technology in that it doesn't use wheels, bearings or axles. Instead, the magnetic field induced on either side of the vehicle helps to levitate and propel the train. As a result, there is no rolling friction, minimal maintenance costs, and little weather-related disruptions.

While the technology may be state-of-the-art, Shanghai Maglev faces other challenges since its inauguration in 2004. The most common criticism it has received is its short length, specifically that the line terminates in Longyang Road, which is around 8 km and 5 Metro stops away from Lujiazui financial district, and even further from notable sites in the city center, such as People's Square. The need to transfer for further 20-30 min journey adds to the inconvenience. Furthermore, riding the Maglev is relatively expensive. Single-ride economy seat starts at 40 RMB with proof of airline ticket purchase, while a typical moderate-length Metro ride costs 4 or 5 RMB.

There has been long-term plans to extend the Maglev into the city center, and continuing westward to Hongqiao Airport. Shanghai is growing at tremendous pace. Its Metro only began operating in 1995, but the ridership has already surpassed that of New York City Subway to claim world's 4th spot. As constructions for future lines and extensions occur by the minute, one can only hope that Maglev will be made more accessible soon. That the technology is remarkable is undisputed; only the operations stand in Maglev's way for it to transform transportation within and beyond China's largest city.

Maximum speed in the early afternoon hours was 300 km/hr.