Archive for August, 2008

The Economics of Happiness

I was feeling particularly happy today and was wondering if it had anything to do with the fat payment I received for a writing assignment. So I set about doing some research and find out that the Freakonomics blog has beaten me to it. Since they have said it so well I will simply summarize it.

1) Rich people are happier than poor people.
2) Richer countries are happier than poorer countries.
3) As countries get richer, they tend to get happier.

Moreover, each of these facts seems to suggest a roughly similar relationship between income and happiness.

What explains these new findings? The key turns out to be an accumulation of data over recent decades. Thirty years ago it was difficult to make convincing international comparisons because there were few datasets comparing rich and poor countries. Instead, researchers were forced to make comparisons based on a handful of moderately-rich and very-rich countries. These data just didn’t lend themselves to strong conclusions.

Moreover, repeated happiness surveys around the world have allowed us to observe the evolution of G.D.P. and happiness through time — both over a longer period, and for more countries. On balance, G.D.P. and happiness have tended to move together.

There is a second issue here that has led to mistaken inferences: a tendency to confuse absence of evidence for a proposition as evidence of its absence. Thus, when early researchers could not isolate a statistically reliable association between G.D.P. and happiness, they inferred that this meant the two were unrelated, and a paradox was born.

Can you the awful lot of crowding at the right hand top corner…these are the rich happy countries.

Doing the Olympics Medal Tally

In my previous post http://moneymanagement.wordpress.com/2008/08/04/the-economics-of-olympics/

I had included a computation by Price Water Cooper house about the expectation of medal tallies

So how near were they to reality?

Though the number one two and three ranking were in the right order, the number of medals won were severely underestimated.

Also underestimated were the winning by U.K. , Ukraine and Cuba

Here is the actual medal tally

China has the most gold though lesser medals in number than USA

Country

Medals Total
CHN China 100
USA United States 110
RUS Russia 72
GBR Great Britain 47
GER Germany 41
AUS Australia 46
KOR South Korea 31
JPN Japan 25
ITA Italy 28
FRA France 40
UKR Ukraine 27
NED Netherlands 16
JAM Jamaica 11
ESP Spain 18
KEN Kenya 14
BLR Belarus 19
ROM Romania 8
ETH Ethiopia 7
CAN Canada 18
POL Poland 10
HUN Hungary 10
NOR Norway 10
BRA Brazil 15
CZE Czech Republic 6
SVK Slovakia 6
NZL New Zealand 9
GEO Georgia 6
CUB Cuba 24
KAZ Kazakhstan 13
DEN Denmark 7
MGL Mongolia 4
THA Thailand 4
PRK North Korea 6
ARG Argentina 6
SUI Switzerland 6
MEX Mexico 3
TUR Turkey 8
ZIM Zimbabwe 4
AZE Azerbaijan 7
UZB Uzbekistan 6
SLO Slovenia 5
BUL Bulgaria 5
INA Indonesia 5
FIN Finland 4
LAT Latvia 3
BEL Belgium 2
DOM Dominican Republic 2
EST Estonia 2
POR Portugal 2
IND India 3
IRI Iran 2
BRN Bahrain 1
CMR Cameroon 1
PAN Panama 1
TUN Tunisia 1
SWE Sweden 5
CRO Croatia 5
LTU Lithuania 5
GRE Greece 4
TRI Trinidad and Tobago 2
NGR Nigeria 4
AUT Austria 3
EIR Ireland 3
SRB Serbia 3
ALG Algeria 2
BAH Bahamas 2
COL Colombia 2
KGZ Kirghyzstan 2
MAR Morocco 2
TJK Tajikistan 2
CHI Chile 1
ECU Ecuador 1
ISL Iceland 1
MAS Malaysia 1
RSA South Africa 1
SIN Singapore 1
SUD Sudan 1
VIE Vietnam 1
ARM Armenia 6
TPE Chinese Taipei 4
AFG Afghanistan 1
EGY Egypt 1
ISR Israel 1
MDA Moldova 1
MRI Mauritius 1
TOG Togo 1
VEN Venezuela 1

Corprates to increase usage of Web2.0 worldwide

McKinsey Quarterly has published an excellent report on how businesses are using Web 2.0 and are going to use it in the coming years. India is one of the countries included in the survey making it more relevant.

The above graph indicates that 80% of Indian companies will increase investments in technology of these 63% of corporates in the financial services feel the need to invest further in technology.

Blogs seem to be popular in India (can we have more corporate blogging?) as are P2P networks

Here is what peeping into the future can show

· Tougher competition. Almost 60 percent of the respondents satisfied with Web 2.0 initiatives (but only 42 percent of other respondents) see them as a driver of competitive advantage. Expect these companies to become more aggressive in the marketplace against rivals that are slower to get on board.

· Higher investment levels. Satisfied or not, all companies plan to spend more on Web 2.0 tools—an opportunity for software developers.

· Building Web 2.0 success. There are few differences in size, region, or even tool use between companies that are satisfied with their Web 2.0 experience and those that are not. This suggests that today’s seemingly insurmountable barriers could be overcome through the adoption of managerial methods that satisfied companies use.

· Innovation. Successful companies already use Web 2.0 for business applications such as communicating with customers and suppliers; soon they may use it to drive innovation.

Iphone anyone?…naaah

The launch of the iconic handset in India had “none of the mass hysteria” that accompanied its debut in the US, Europe and other parts of Asia in July. Priced at $700-$800 in India, or twice the monthly salary of a white collar middle manager, the iPhone response was predicted. Still, it was an “enthusiastic reception,” and for those who can afford it, the phone gives them bragging rights in a country where mobile phones are still seen as “symbols of status and success,” and where the phone has already enjoyed a strong run in the black market.

While India may be amongst the hottest markets for Apple’s iPhone 3G, the country presents several unique challenges which the US-based multinational will have to address before it can succeed here. Not just Apple, but its partners in India—Bharti Airtel and Vodafone—will have to play their roles to perfection for their customers to enjoy the iPhone.

India is amongst the few markets where the partner telcos are spending huge sums training thousands of their employees to activate the iPhone. This because, unlike their western counterparts, Indian customers cannot be expected to activate the phone online. Low internet and PC penetration is a roadblock here and even amongst those in metros and large cities who own PCs, only a small minority have Apple’s iTunes on their systems.

The midnight launch of iPhone by Vodafone Essar will be accompanied by offer for payment in easy installments by credit cards.

The GSM giant has tied-up with credit card-issuing banks including Barclays, ICICI Bank and Axis Bank for providing instalment option to iPhone customers.

EMIs will be of six months and 12 months duration. To begin with, Vodafone will sell the 3G iPhone, priced at Rs 31,000 for 8GB version and Rs 36,100 for 16GB version, in 50 cities through 250 stores.

The black market version has been available for around ages though.

With a price tag of $700, or about three times the US retail price the junta is expecting the prices to come down so there is a wait and watch being adopted.

Meanwhile if you cannot wait there are always credit card instalments.

Viagara for Women – do we need it?

Not to sound feminist but do women need Viagara? We are the ones blessed with multiple orgasms as well as the pesky little thing called fidelity. Why on earth will a women spend her precious resources for buying Viagara when she can buy a great pair of shoes

In any case here an article about the issue from http://www.bnet.com

Yet another company is taking a crack at the “Viagra for women” concept. This time it is Noven Pharmaceuticals, which has licensed its testosterone-based skin patch to Procter & Gamble. The companies did not disclose the terms of the deal.

The move is an interesting one for two reasons. First, P&G has already dipped a toe in this market before and largely failed to, um, excite anyone. Second, the female sex-drive-booster category is an historic graveyard of failed products. In other words, P&G ought to know better.

On paper, the idea is fabulous: Viagra was an astonishing success, but it tapped only half the market — men. Could it be repeated in the better/other half? But let’s look at the history. Back in 2004, P&G made its first attempt at a libido-enhancer for women with a product called Intrinsa, licensed from Watson Pharmaceuticals. The FDA rejected it and it hasn’t been seen since. Watson no longer mentions the product on its web site.

Although P&G maintains a web site for Intrinsa in foreign countries the company doesn’t mention sales of Intrinsa in either its most recent quarterly or annual report. And I cannot remember an occasion on which my European buddies have ever joked about having an “Intrinsa moment.” The foregoing strongly suggests that this business is — irony alert! — a modest one. And until very recently, the Noven project was on hold at P&G, according to Noven’s own site.

Elsewhere, the pursuit of the female Viagra was most recently investigated by Pfizer, which funded a study of women taking Viagra. The study found that among women whose ability to orgasm had been affected by antidepressants, using Viagra helped the situation. However, the study has a number of problems, most importantly that it is tiny. Pfizer says it has no intention of pressing the FDA for a women’s indication for the drug.

Like Noven/P&G, BioSante Pharmaceuticals is also working the testosterone skin patch idea. It claims that “[p]hase II trial results showed LibiGel significantly increased the number of satisfying sexual events by 238%” and says it expects approval in 2011. So at the very least, P&G has waited too long to get the category to itself — a key element of the Viagra business miracle.

Other topical solutions have been tried by QualiLife Pharmaceuticals, which spent a large sum of money marketing Zestra, even though a closer examination of the product indicated some wishful thinking on the part of the company. QualiLife currently does not have a web site, so I’m going to take a giant speculative leap and suggest that this company, if it still exists, did not make a fortune in this business.

Even the hucksters at Berkeley Premium Neutraceuticals got in on the business at one point, although they are currently marketing their product for something completely different — “normal hormonal balance,” whatever that is.

A cynic might point out that the problem here looks similar to pharma companies’ failed pursuit of diet drugs. In theory, the market looks highly lucrative, but in practice the biological mechanism may be too complicated to crack with a single drug.

Be stress free with Feng Shui

This is one of my published articles

Wouldn’t it be great to come home to a place where, as soon as you opened the door, you felt completely relaxed? In today’s hyper world, a soothing home is ultra-mandatory, as is replenishing the natural energy flow that is inside – and outside – all of us.

And what if it was a relaxing home that attracted prosperity and productivity? According to the rules of Feng Shui – the ancient and wildly popular Chinese decorating art – all this, and more, is possible. By carefully manipulating your environment with proper placement and balance, you can invite harmony, abundance and good fortune in, and stress and pressure out.

The Feng Shui Energy Grid

If you were to hire a Feng Shui decorator, he or she would divide your home into an energy grid (to let energy circulate freely), and maintain balance, in each of these steps, by doing the following:

1. In every place but the bathroom, position the largest, most central piece in the core, or center, of the room, i.e., under a fan. Heavy objects placed on the floor, in a key place, ground you. You need to trust your instinct on this placement; walk around and see what feels right. Nothing should be up against a corner or a wall. Let air circulate freely; you will not have anything tucked kitty-corner.

2. Do not allow clutter into your home. Not in the living room, not in the dining room, not in the bedroom – it interferes with romance – and certainly not in the kitchen. You simply can’t think clearly with clutter. In order to know what you have to work with, you need to have everything in its proper place, like an artist with a palette.

3. Use light in dramatic ways. Light is usually applied at eye level. Of course, the best light is sunlight. If you don’t have much light, use mirrors to reflect the light you do have, and add crystals to reflect additional light.

4. Replace sharp corners. Feng Shui practitioners do like to envision every room as a square or a triangle, but when it comes to furniture, these corners bear the term “poison arrows.” So what sort of table do you eat on? You might consider purchasing a round or oval table. In that way, there will be no interruption of the energy flow. (Remember: Feng Shui is about lessening stress, and promoting good vibes. There is, therefore, no fight for power, or exploiting vulnerability, such as might occur in a rectangular or box-like table, where someone is at the so-called “head” of the table.)

5. Decorate each room separately. Look at the area you are decorating from all angles. You want it to be balanced from every entry and exit point. Go in and out of the room a few times. Close the door, if there is one, to give yourself a fresh new perspective, then re-enter.

6. Change the color scheme of every single item in your room. All accessories should match. If you go for a soothing blue-green, don’t only do the rugs and couches. Do the artwork, the pillowcases, and the knick knacks.

7. Symbolic elements like earth, metal, water and wood are used in the decorating scheme to balance out a personality. If there is a need to balance out toughness, add “feminine” or soft energy, using curtains, plants, wood, and delicate sounds. Music that is kind to your mind, like nature sounds, is good, too. To induce a more “masculine” or busy energy, use metal. To tone down aggression, use a lovely ceramic (natural) bowl filled with water, or a waterfall statuette.

8. With problem areas – say, rooms you find yourself not entering, despite having decorated them very nicely – assess what you have, now, and what you can bring in, from another room. For instance, in a room with bright sunshine, like a sunroom, you’ve got bright light to work with. This would be a good place to spend weekend mornings, right? Or you might want to bring your laptop in, to finish a report in comfort and leisure.

Stress all around us

For more than 3 millenia, Chinese people have used the ancient wisdom of Feng Shui to bring greater prosperity to themselves and to their environment. In the modern era, we are constantly being bombarded by stress.

Whether you’re blowing your horn in a traffic jam, trying to wade through the spam emails clogging your inbox, taking unsolicited calls from salespeople on your home phone and that’s not even counting the everyday demands put upon you by your work, family, household chores and if you have a second to spare – then try to cram in some “leisure time”.

Is it any wonder your nerves are feeling jangled and frayed!

We are all guilty of trying to do too much throughout the day, constantly piling on the pressure with unfulfilled personal expectations just adding to stress of just getting through the day.

Stress Free Environment

You can restore your energy, recharge yourself and release tension by utilizing Feng Shui to create a home that is a sanctuary.

The principles of Feng Shui can help you create an environment to attract and direct positive energy. You may not be aware of how many different ways your physical space is affecting your well-being. Feng Shui provides help to identify the issues in your environment. If learning about Feng Shui sounds like one more project in an already busy life, consider this is one project which will lighten your load, provide relief and enhance your energy, rather than drain your internal resources or tire you out.

Making the pursuit of Feng Shui knowledge a worthwhile use of your time.

If your energy and your efforts are hindered, if your environment is increasing to your sense of restriction because the Feng Shui is out of balance, your stress only gets worse. Too much stress on the body has been demonstrated time and again as negative for your well being. The overproduction of stress hormones like cortisol and adrenaline put extra strain on all the systems in your body. These hormones contribute to chronic conditions, like heart disease for example which plague society.

Excess stress wears down the immune system and leads to increased susceptibility colds and other illnesses.

One of the keys to restoring energy and relieving stress is getting enough rest. Using Feng Shui to arrange your bedroom will help you get the fitfull sleep you need. Feng Shui will guide you in selecting the right room to sleep in, the right placement of your bed and the elimination of unwanted items – like mirrors in the bedroom.

All of which will contribute to the quality of your rest and your waking energy.

Anxiety and stress trap and deplete energy. Correct use of Feng Shui optimizes energy. An environment which employs proper Feng Shui principles contributes to harmony, balance and well-being. The Chinese believe Feng Shui helps create the conditions whereby you can excel in your life and your relationships.

Restore Balance

Feng Shui restores your energy because the objective of Feng Shui is to allow you to reach balance with your surroundings. You will learn how to place items and arrange space so as to assist the flow of positive Chi energy. You will learn to leave negative energy at the door and fill your living space with good energy. With Feng Shui you can give yourself the positive pleasure of a harmonious, planned home environment designed to increase your well-being.

The Economics of Spam

The dark side of the Web

Spam is flooding the Internet with many copies of the same message, in an attempt to force the message on people who would not otherwise choose to receive it. Most spam is commercial advertising, often for dubious products, get-rich-quick schemes, or quasi-legal services. Spam costs the sender very little to send — most of the
costs are paid for by the recipient or the carriers rather than by the sender.

There are two main types of spam, and they have different effects on Internet users. Cancellable Usenet
spam is a single message sent to 20 or more Usenet newsgroups. (Through long experience, Usenet users have found that any message posted to so many newsgroups is often not relevant to most or all of them.) Usenet spam is aimed at
“lurkers”, people who read newsgroups but rarely or never post and give their address away. Usenet spam robs users of the utility of the newsgroups by overwhelming them with a barrage of advertising or other
irrelevant posts. Furthermore, Usenet spam subverts the ability of system administrators and owners to manage the topics they accept on their systems.

Email spam targets individual users with direct mail messages. Email spam lists are often created by scanning Usenet postings, stealing Internet mailing lists, or searching the Web for addresses. Email spams typically cost users money out-of-pocket to receive. Many people – anyone with measured phone service – read or receive their mail while the meter is running, so to speak. Spam costs them additional money. On top of that, it costs money for ISPs and online services to transmit spam, and these costs are transmitted directly to subscribers.

One particularly nasty variant of email spam is sending spam to mailing lists (public or private email
discussion forums.) Because many mailing lists limit activity to their subscribers, spammers will use automated tools to subscribe to as many mailing lists as possible, so that they can grab the lists of addresses, or use the
mailing list as a direct target for their attacks.


The Economics of Spam

In general, spam is the excessive distribution of messages to as many people as possible.

E-mail is the cheapest form of direct marketing (much cheaper than telemarketing or bulk junk mail through
the post). Andrew Leung (2003) observed observed that the response rate to spam is as low as 0.005% – only 50 in every million people respond to UBE.

But despite this very low response rate spam can make economic sense because the costs of dealing with it
are felt only by those recipients who don’t want it.

And CipherTrust (as reported by John Leyden) says that the response rates for pharmaceuticals is 200 per million, for

“Rolex” is 75 per million, and for porn is 50,000 per million! (Under 1 in 100 click-throughs actually yield a sale).

Fighting Spam

This is an example of negative externalities. Private costs and social costs diverge. Spammers are either unaware or don’t care about the costs they impose.

Anti-Spam Software

We can reduce spam in our
e-mail InBox by installing add-on anti-spam software on our workstation.
The marketplace offers a wide selection of such software that works in conjunction with our e-mail client software. 

The down side of anti-spam software is its expense and ongoing management effort.

A little Help from our ISP

One line of defence against spam can be our Internet Service Provider (ISP).  ISPs that filter spam
have happier customers and avoid clogging their e-mail servers with useless e-mail. 

E-Mail Client Filters

Most e-mail client software
comes with features designed to reduce spam in the InBox by searching for telltale signs in the contents of incoming spam.  For example, in Microsoft Outlook, we can set up various filters using the Tools > Rules Wizard function.

Since spam is rarely sent directly to us but to a list of undisclosed recipients, setting a filter that looks for specific words in the subject line is a good place to start.
More sophisticated filters can search for undesirable originators or selected properties of documents.

The limitations of the client e-mail filter approach are that the spammers are fully aware of the features of
the Rules Wizard and can send messages with misleading Subject lines and document characteristics that bypass our filters.  Also, these filters are not as sophisticated as the add-on software.

Our Behavior

Quite a different approach to controlling spam relies on disciplining our own behavior.  We must resist the temptation to participate in surveys, contests and “free” offers.  All of these ask us for information that greatly increases the
likelihood that we will be spammed.

Definite Don’ts

Don’t ever click on the
Remove button of spam e-mail.  Rather than removing yourself from a list, clicking the Remove button actually confirms that you exist.  Now the spammer will subject you to more spam.

Don’t ever, ever buy anything from a spammer.  Aside from the potential for fraud, we are only encouraging more spam.

Don’t complain.  In my experience there’s no satisfaction to be gained.  We’ll only raise the level of our irritation meter.  Move on.  Life is too short.

If it’s too good to be true…

Needless to say, nobody in Nigeria is really looking for a random person in the US just to do some money laundering.

No national lottery gives prizes to people who don’t buy tickets.

You don’t get refunds on products you haven’t bought.

And no bank or credit company will ever call you up and ask for your PIN. They know it already. They especially won’t call you and ask for your PIN if you had your wallet stolen.