Saturday, March 29, 2008

Spooky Earth Hour

So for weeks the school and newspapers had indoctrinated our children with the coming of Earth Hour: one hour on Saturday night (from 8pm) when all the lights would go out. Our 7 year old son was adamant: no torches, only candles.

Then at 8:02, he had the following conversation with his mother:
"With the lights out, I'm scared."

"It's OK I'm with you."

"This is all Kevin Rudd's fault." (FYI: the new Australian Prime Minister -- and a reasonable inference since he was credited with putting Australia back on the environmental path.)

"No, everyone thought this was a good idea."

"Who thought this would be a good idea?"

"Me, your father, everyone you know."

"I only thought this was a good idea because they said so at School. Can we have the torch?"
This was a big turnabout. He had been on about this for weeks. When it comes down to it, school kids (and probably all of us) can talk about all this stuff in the abstract but until they experience it, it is essentially meaningless. It just goes to show how far we have to go.

From my perspective, I was looking forward to getting the telescope out and looking at the unpolluted sky. Alas in Melbourne all we had a view of was the unpolluted clouds.

Thursday, March 27, 2008

Really stuffed toys

In Slate, Emily Bazelon thinks that the a new web site, Webkinz, will save her from worrying about stuffed toys. As she points out, children form an attachment to stuffed toys beyond what is hygienic or convenient. On this, I can only agree. Our eldest had, for what seemed the longest year (from 18 - 30 months), a life size Maisy mouse soft toy. And by 'life size' I mean, the size of a mouse. This meant that it was carried everywhere and was always hard to find. It got dropped in puddles, stepped on and mangled. We went on a longish trip and our main concern at all times was not whether we had our daughter but whether we had Maisy!

Maisy cost like $5. I should have bought 7 of them. So when Child No.2 came along and formed his unhealthy attachment to a small ET doll (he loved the eyes), I stocked up. We had several ET dolls of that size, some larger ones and then for his second birthday a life sized one that was essentially immovable. (Yes, the size of ET in the movie!) We were going to hedge our bets fully. Suffice it to say, at some point after he was three years old, he decided ET scared him and out it all went. We now have a shrine to ET in the hallway.

For Child No.3, she has had a Sid (from Ice Age) and now a standard teddy bear. If it gets lost, we are now hardened folks and will take the tears.

According to Bazelon, Webkinz is like some cheap back-up. Apparently, in her household, should one of these toys meet an untimely demise, if they are a Webkinz toy, their virtual counterpart will save the day. Her child will be satisfied because it lives on "in the computer." Yeah, but just wait until she wants to take your laptop to cuddle up with in bed. And what happens if it is a PC and crashes with a not so cuddly, blue screen of death. Try explaining that one. After all, that sort of thing routinely brings adults to tears.

Toothy incentives

So the second of our 7 year old son's two front teeth is ready to come out. Currently, he looks and sounds like a caricature of Bugs Bunny. The problem is that it is getting quite painful to eat. And that is not fun to watch as I discovered at dinner tonight.
"I've had enough. I'll give you $10 if you let me take it out."

7 year-old: "No! It will hurt more."

9 year old: "Why not? Add to that $2 from the tooth fairy and that's $12. Take one from me."

"This isn't about you. Well, it is that or we are going to the dentist."

7 year-old: "No."

9 year-old: "I know. Why don't you take $10 from his money box if he doesn't let you take his tooth out."

"How will that help?"

9-year old: "That means that with the $10 you will give him if he lets you, he makes $22 in total from letting you take his tooth out and that costs you only $10."

"Hmm. Obi-Wan has taught you well. I like that thinking."

7 year-old: "No!!!!!"
Suffice it to say, he was not sufficiently motivated by money to want the threat induced incentive. But I will have to remember my daughter's clever use of incentives the next time I try to bribe her; it is a cost effective plan.

Tuesday, March 25, 2008

Cloth vs disposables

If you care about the environment, it is line ball. If you care about your sanity, the choice is clear.

Saturday, March 22, 2008


My 9 year old daughter came into my study the other day. She picked up a book. "What's this? Mi-cro-nomics! Not another 'onomics' book. We have Freakonomics, Parentonomics and now this. When will it end?"

Friday, March 21, 2008

Risky teenage behaviour

It is not everyday that an actual academic article appears about economics and parenting but the April 2008 issue of the Economic Journal contains a piece entitled: "Games Parents and Adolescents Play: Risky Behaviour, Parental Reputation and Strategic Transfers" by Lingxin Hao, V. Joseph Hotz and Ginger Z. Jin. The paper tries to understand risky teenage behaviour (you know getting pregnant, taking drugs, etc) and how it is related to parenting -- specifically, a parent's ability and willingness to use money later on to reward or punish such behaviour. It is both theoretical and empirical.

Let's begin with the theory. Gary Becker was the first economist to consider this issue. He looked at the interaction between a Rotten Kid and an altruistic parent. Rotten kids think about doing things that are destructive, not only to themselves, but perhaps to family members. The altruistic parent wants to deter such behaviour and so wants to punish kids who misbehave and reward those who don't. The problem is that after the fact a parent loves all their children equally and so may not be able to commit to the requisite punishments. Becker's analysis demonstrated that such commitment would be possible if parents could simply transfer the joy around with money. In that situation, a parent would observe that one kid misbehaved and benefited while another behaved well but sacrificed. To equalise the score, the parent would naturally give the 'good' child more. Indeed, once the Rotten Kid realised that this would occur, that kid fully internalised the impact of their behaviour on the rest of the family and harmony would reign.

Now, while this is a deep result, it is dependent upon being able to trade-off love and money easily. That is hard to do in which case, the parent faces a commitment issue and may well end up not punishing bad behaviour and, not surprisingly, such behaviour may occur. Let's face it, if you want to explain teenage risk-taking, that has to be the theoretical starting point.

What Hao do is notice that if a parent has a few children and faces this commitment issue, they may be willing to go hard on the older siblings to send a message to the younger ones. But it is trickier than that as the younger ones would understand they were just doing this and so that would be ineffective. To resolve this you have to believe that children are uncertain about how caring their parents are and that is what Hao do. If you are willing to go with all that you have predictions that older siblings will get less money from their parents than younger ones.

So what do they find when they look at the data?
Consistent with the reputation model, we find that daughters who had teen births or children who drop out of high school receive fewer parental transfers after reaching adulthood when the parent has a larger number of younger children in the family. Moreover, focusing on the offspring within the same family, we find that older siblings are less likely than younger ones to drop out of high school or to have births as teens. These findings are consistent with the reputation model’s implications that parents may have an incentive to engage in strategic responses to the risk-taking behaviour of their children according to birth order and that older children understand these incentives and are more likely to respond by refraining from committing risky behaviours compared to their younger siblings.
Of course, it may just be that larger families have less money to give to children anyhow and as income grows, the younger ones just get more. But it turns out that families with lots of money seem to behave in the same way as ones with low wealth.

It may also be that parents are just learning more about parenting. It is hard to distinguish this notion from one where parents are developing a reputation. However, if more learning is concentrated on the first born then there should be something more special about them than about the 2nd to nth child. The paper finds nothing special there.

This is a provocative and careful paper. Moreover, it is precisely the sort of work that makes non-economists think economists are crazy. I enjoyed it.

360 degree parenting evaluation

While the children were having breakfast this morning, the following discussion took place:
7-year old: "When I become a Dad, I want to be one who exercises every day and is fit like Mum is."

9-year old: "Actually, Dad is not too big given that he doesn't do any exercise." [Hmm, heroically thin, I like that argument.]

7-year old: "But so and so's Dad is really quite strong." [You know, I am standing right here!]

9-year old: "Yeah but our Dad's a better parent, no matter how large." [Guess who's getting an extra cookie!]

Thursday, March 20, 2008

Who is Horton

Plausibility issues aside, Horton the elephant stands out as one of the truly heroic figures in children's literature. In both Horton Hatches the Egg and Horton Hears a Who, the elephant stands as a lone voice against mob judgment. In one case, he is keeping a promise (an elephant is faithful 100 percent) and in the other, he stands on evidence even though he is alone in seeing it. He is a hero of individual rights and confidence and, if even half of that message gets through to a child, these books have served us well.

It was with that in mind that we went to see Horton Hears a Who, the latest attempt to bring Dr Seuss to the movies. The other attempts had to all accounts been failures although we had only seen The Cat in the Hat. There simply wasn't enough substance for an extended story. For that reason, our expectations were low.

Horton Hears a Who is not a failure as a movie but it will not rate as anything special either. All the modern elements -- great animation, familiar voices and a few one-liner gags -- are there. And the essence of the story is the same: Horton hears the voice of a small but unseeable civilisation, Horton opts to defend said civilisation, the mob does not believe Horton and turns on him, and finally, the civilisation makes itself heard and saves itself. But within this there are distinct and important changes.

First of all, Horton is not alone in being alone. The mayor of WhoVille faces the same issue and it is Horton and the mayor who have each other, with a similar struggle, to give them strength. This diminishes somewhat Horton's individuality. Second, the mob while a mob is distinctly led by the kangaroo. That leadership is less obvious in the book and critically, the kangaroo's joey is just as biased and distrusting as everyone else. In the movie, Horton is the school-teacher and so the children, while powerless, do believe in him. From my perspective, this too diminishes Horton's individuality as the author would have intended it. Finally, in the book, the mob was just plain mean. It is quite unclear why they turned on Horton who wasn't harming anyone. They just did giving rise to a subtle message of the right to privacy. In the movie, the mob gains a rationale -- 'protecting the children from bad thoughts' -- which, while spurious, moved the issue beyond a private one and gave it a public force.

These changes both reduce the injustice faced by Horton and his small friends but also the true strength of his struggle against it. But it also shows why it is virtually impossible to take relatively short but beloved children's literature and modify it for the movies (although there are exceptions such as The Iron Giant). They will make enough money this time around to keep trying. I am going to have to be much more careful about going.

The power of the crayon

The prototype of this game injected much fun into our household. Here is a video of Crayon Physics Deluxe which is coming soon (Slate story here). Here is the original game if you haven't tried it already. Remember it is 'educational' so you can spend as much time playing it (with your kids) as you like.

The whole grain food dilemma

I am going to confess something: I hate whole grain bread and love white bread. There I said it. Sadly, too many informed people think that eating white rather than whole grain bread is better for you.

Being normal people, my kids share my preference. And so to respect the workings of household democracy the choice has been made clear. There is no white bread in the house. If you want bread it is of the grainy variety. And the end result: less bread consumed, no daily discussions and no interest in political philosophy.

According to this video from Slate V, that is apparently the way to go. Although what would happen if it resulted in no bread consumed. Is that worse for health?

Wednesday, March 19, 2008

A sample of Parentonomics

When Justin Wolfers contacted me a couple of days ago that he was thinking of writing a post about this blog on the NYT Freakonomics blog, I thought this would be a great opportunity to share a sample of Parentonomics (which is coming out here in Australia in August). Here is Justin's post and click here and you can read Chapter 7 of Parentonomics. It encompasses page 69 that Tyler Cowen argued was what you should read rather than judging a book by its cover.

By the way, Justin isn't a parent but he spends lots of time thinking about marriage.

Sunday, March 16, 2008

What has the tuckshop ever done for us?

The other day, my 9 year old came to me with an issue.

"Dad. Did you know that a juice cup at the tuckshop at school is now half the size but costs the same as before?"

"Is that so?"

"Yes, and it is not just that. The pasta has halved in size and the prices of Sunnyboys [a frozen ice pyramidal thing] have gone up."

"So what's the problem?"

"Well, everyone is talking about it. It is pretty unreasonable. I want to do something about it."

As an economist, it is hard not to be supportive at this point. Here we have a child complaining about the price of a purely aspirational good sold by a monopolist. "Aspirational" because she, in fact, is never allowed to buy anything at the tuckshop. Regardless, I can't imagine a social cause with "Gans family" more stamped on it.

"So what do you want to do?"

"I think we need to complain."

"How about a petition?"

"Oh yes, they tried that with the school bell. But nothing ended up happening."

"Maybe it will this time."

"And if they don't maybe, I'll open up my own shop. I can sell more for less and still make money."

"Good thinking but let's not get ahead of ourselves here."

And so she set out to craft a petition for students at school to sign. Here is what she wrote before I took a look:
We the undersigned wish to protest the high prices in the tuck shop. Recently we have noticed that things in the tuck shop have been getting smaller for the same price, getting smaller and for more money, and/or just going up to unreasonable prices. For example: the frozen juice cups [as we call them] are now almost half the size they use to be, and they still cost 80c. There are many similar stories just like that.

We say this because some people don’t have time to pack lunches, and they suddenly come to school with too little money. For everybody they would be spending unreasonable amounts of money.
"That's great. Now, why are the prices unreasonable?"

"Well, people say that they are more expensive than other places."

"OK, you need to find some examples of that and put them in here. That will make it much more convincing."

It turns out that we had the price list of the tuckshop -- they send that home to parents every year. Now, what to compare them to? We talked about various options and decided to look for stuff you could buy in the supermarket as a good starting point. She found out that you could buy a six pack of Sunnyboys for $6 at the supermarket whereas they cost $1.20 a piece at the tuckshop.

She ran away to write this great example into her petition. A little while later she came back.

"I don't think the Sunnyboy one works."


"Well, when you buy more of something at the supermarket they often cost less than smaller things. That might be the case here. Also, the tuckshop freezes them and that probably costs something."

So it was back to the drawing board. We decided to search Safeway on-line for products that were comparable. We came across a 600ml Big-M flavoured milk. It was refrigerated at both places so was a good candidate. The tuckshop price was $2.70 and Safeway's price, $3.55! Oh oh.

"Now what am I going to do?"

"Well what things did you think were priced too high?"

"How should I know? You never let me buy anything at the tuckshop."

"True. How about asking around at school?"

And so that is what she resolved to do although I suspected the revolution was soon to be over. But then she came back with one final question.

"Dad, why are prices at the supermarket so high?"

Saturday, March 15, 2008

More parent-teacher interview surprises

I have written before that we seem to be constantly surprised when we go to our eldest's parent-teacher interviews; pleasantly surprised that is. Last year, it was her good behaviour and it turned out to be the incentives that did it. This year, different thing but same story.

The interview was with her two 4th grade teachers. Her main teacher and her teacher for a second language. I must admit that we think learning a second language is a good thing but not so much that we have ever encouraged it or cared less. So in parent-teacher interviews, the language teacher gets little (alright, none) of our attention.

So after much for the interview with the main teacher we came to the obligatory language assessment. Usually, our daughter is doing fine. This time we got: "she is star. She is the best. We think she is gifted." This provoked the response: "really? We had no idea. How do you know?"

Well, it turns out how they know is that they keep a posted set of rankings taking all kids in the class: 1 - 22. And it is based on the teacher's assessment in language performance. Suffice it to say, my daughter -- who had previously shown as much interest in the subject as us -- jumped straight to No.1 and has not budged since. Well, isn't that interesting?

It was then that her main teacher -- who, in many respects, had popped straight out of the 60s -- piped up:

"Hmm, I wonder why she doesn't do that for other subjects."

"Well, do you have a ranking?" I asked.


"Does it work the same way?"

"Well, each week a start out with each child getting a random position but after that they can move up by challenging other children. Your daughter usually climbs to about 3 or 4 and then stops,"

Ahh, so it was a muted incentive system. You can invest all week in climbing to the stop only to find yourself unceremoniously thrown back down. Turned out that our daughter realised this. "I never go down but I am only going to challenge someone above who I know I can beat easily. Otherwise, I will have to try and beat a better person only to lose the ranking in the next week."

Explicit, strong incentives don't work for all children but in our case they do in a stunning way. They think she is gifted in languages. I'm not sure about that but I do know that she can see through incentives. Now that is something I do value.

Monday, March 10, 2008

Plausibility Check: Horton Hatches the Egg

My son and I argued last night about what was more implausible in Horton Hatches the Egg: that the egg produced an Elephant Bird (my son favoured this) or that following this, the circus sent him back to Africa happy (that was my one)? My son argued convincingly that just sitting on an egg would not get the elephant bit into it as "it was all done earlier and who is that baby bird's daddy anyway?" Whereas, my implausibility candidate might have happened.

But while I am at it, let's not forget the year long gestation period for that egg and how Horton might have got himself food for the 51 weeks of it that he was in charge. Nonetheless, we can all agree that the hunters were correct in seeing the commercialisation options of an elephant in a tree.

Monday, March 3, 2008

Who to compensate in toilet training?

Matt Asay is trying to deal with toilet training one child when there is an older one around. They decided to bribe both. The problem is that you are incentivising a team:

How you compensate a sales team can create all sorts of good incentives and/or perverse disincentives. For example, do you really want your channel sales team/person competing hard against your direct sales team...when you have fewer than five people on the team? Do you really want inside sales to hold down the value of a deal if, for example, they are required to turn over any deal worth more than $100,000? If they get paid $0 for a deal worth $350,000 and 5 percent on a deal worth $99,999, that deal is going to be held to $99,999 regardless of what would be best for the company.

And so on. My CEO calls double compensation "double bubble," and we generally try to avoid it as much as possible. But as with Greta and Lily, sometimes it makes a lot of sense to compensate two people on the same deal, especially early in a company's life when cooperation between the sales team should trump competition between the team. You will end up with times when a salesperson will get compensated when they added zero value to the close of a deal, but in the long run you're rewarding the effects of a team effort (exceeding a sales goal/potty training).

Near as I can tell, he had it easy. His eldest just demanded payment. Regular readers of this blog will recall that I tried the same thing but with worse consequences:

... we decided to implement our more explicit incentive system that had worked well with Child No.1. But there was a twist: Child No.1 was around and in many ways we need her help. So Child No.2 would receive a sweet reward -- one or two jelly babies as the case may be. But also where he was successful, Child No.1 would receive the same. We viewed all this as a team effort and Child No.1 was part of the team. To align her incentives we gave her a share of the pie.

That part worked swimmingly. She encouraged our son to sit on the potty and spent time showing her books. It seemed that we may have efficiently outsourced this activity: something valuable in our time strapped lives.

Alas, it was not quite to be. We had to put a stop to it all when we discovered Child No.1 feeding Child No.2 copious amounts of water to help the process along! (By the way, in case you are wondering Child No.1 was 4 years old at the time).

The basic rule of incentives: if you want to pay per success, make sure that the agent can't determine the number of opportunities for success.