Sunday, October 2, 2011

A rant about Money

- At the Microsoft 20th anniversary celebration, there was a talk about optimizing hospital readmissions. Many Medicare patients are readmitted at a hospital within 30 days of being released from a previous stay, a frequent sign of improper handling of the situation. How can one do better? Some method apparently decreases the number of readmissions by 35%, by increasing the cost (of care for those patients, I imagine) by 5%. Instead, the method presented decreased the number of readmissions by only 20%, but, instead of increasing costs, decreased costs by 5%.

I wondered: is that the right measure? It is difficult to understand, first, why reducing the number of readmissions is the objective (it seems very different from "good health care", whatever that might be), second, if we accept that it is the objective, why reducing it less but saving money is better than reducing it more but spending money.

- Another talk was about news aggregators. Instead of reading news directly from their favorite newspaper, more and more people read news accessed via a news aggregator or facebook mentions from friends. The speaker asked: does that help newspapers, or does it hurt newspapers? Then he showed that people end up reading newspapers more than before. The implication seems to be that the evolution should be good for newspapers.

I wondered: is that the right measure? What interests me, as a user, is whether we are better informed. Does this change give us better access to better information? Are there fewer events out there that I would like to hear about but never even know exist? Are articles more thoughtful and better researched? The question of whether the evolution brings (or should bring) newspapers more or less money, although not independent, is in itself quite ancillary to that principal concern.

- The last issue of The Atlantic had an article, "Where the skills are", about cities. "As highly skilled people concentrate in these places, the rate of innovation accelerates, new businesses are created, and productivity -- and, ultimately, pay -- grows." So, apparently the ultimate measure of why cities are good is that people are paid more money.

- The Washington Post headline on Saturday: "As Nobel Prize season starts, who will get those lucky, lucrative calls?" So, the main reason why someone would hope to receive a Nobel Prize is the money.

- Americans, questioning the cost of college, look at the tradeoff between the expenses and debts incurred to earn a college degree, and the increased salary that a degree later gives you. So, apparently people go to college solely so that they will earn more later, and it is assumed that the benefits of college are captured by the change in pay.

Money is the ultimate measure of everything. It is no longer a means to an end but an end in itself, and everything else is subjected to it. Living longer is good if you retire late, because it gives you time to earn more money. Being married is good because the reduced costs of shared housing and other factors make people more wealthy. Going to church is good because it's correlated with higher grades in school and higher pay at work. Having children is bad because raising them costs a staggering amount of money. If you are handicapped so severely that you can earn no money, your life is literally speaking not worth living, and ending it would be a matter of compassion.

Economists have Money has taken over the world.


  1. I think it is more that people (and scientists and engineers and economists...) always tend to overestimate the importance of aspects that can be measured. One way to measure the benefit of a college degree is how much money you make afterwards, and as a result that is all economists talk about. The other intangible benefits can't be measured explicitly, and they are ignored.

    It is the same way in algorithms by the way :-). The running time or approximation quality of an algorithm can be measured, and that is all people talk about. There are other things that make an algorithm good and usable -- such as, simplicity of implementation, lack of parameters that need to be set -- but those are hard to measure, so nobody talks about them or tries to optimize them.

  2. Anonymous, I agree. The relation between exclusive focus on money in life and exclusive focus on runtime in study of algorithms had not escaped me, but I don't know what to do about it: analyzing runtime is the only way I know to approach algorithms!

  3. Claire -- for most of the situations you've described, I don't think money is the only benefit people look at. At the same time, it's not one to be ignored, either. I agree there could be more balance.

    The case for newspapers, for example, is interesting. For newspapers, at the individual level, it certainly is about money. For society as a whole, news has the important information role you mentioned. One argument is that this may be a case where government has to step in to avoid a "market failure" in news, although there's certainly people who argue the other way as well.

  4. Anonymous #1 and Claire --

    Great point, relating this to algorithms! And I'm largely in favor of considering the other aspects of algorithms besides runtime and the approximation factor. Here's a quote from a recent paper (in the intro, listing our contributions):

    Our algorithm is conceptually simpler and substantially easier to implement than previous algorithms. We firmly believe programmer time should be viewed as a resource similar to running time and space. We were able to use an off-the-shelf implementation of Space Saving, but this fact notwithstanding, we still spent roughly an order of magnitude less time implementing our algorithms, compared to those from \cite{XXX,YYY}.

    I made similar points in my talk at the Beyond Worst Case Analysis workshop; the slides are online at Not sure I'm making headway against the crowd, but...

  5. You're possibly being a bit over-sensitive here; just to take a few examples:
    - Hospital readmissions: isn't the point to exhibit a tradeoff between fewer readmissions and reducing cost? And the results demonstrate two points on the curve?

    - Cities: "ultimate" in the sentence doesn't mean "best", it means "eventual/final". Anyway, what are the non-economic arguments for cities? The congestion and traffic?

    - College: I'm sorry as a fellow professor to have to write this, but as college costs keep rising (faster than inflation, way faster than salaries), at some point cost does play a role. Why should someone pay for college, when (for the average person) they could just as much from iTunes U and the library?

    I'm not saying everything reduces to economics, but to pretend that money is unimportant is equally untrue.

  6. Have economists really taken over the world?
    I don't think that economists claim to know what goals one should
    pursue in one's life, or even what should be the ultimate goals of
    public policy (for instance, better healthcare).

  7. As an alternative to big-O, we could measure algorithms according to which one is selected for implementation in real applications. If no algorithm is implemented for a certain problem, maybe the problem is not important? If a new algorithm replaces one that was previously widely used, we can call it influential. The main problem with this approach is that it requires the test of time, which is quite an inconvenience when you need to decide who to give the best paper award to for a result that was not even published yet.

    If these measures are irrelevant to you because you do algorithms for their intellectual challenge and pick problems for their simplicity and beauty, that's fine - you're a mathematician and you can measure your algorithms however you want.

  8. Economics is not about money. It is the study of "who gets what and why". Who gets respect, who gets recognition, who gets love, are all economic questions. See, e.g.,

  9. Reading the market design blog, I followed the link to the paper "Repugnance as a constraint on markets", you may like it, here's a quote: Concerns about the monetization of transactions fall into three principal classes. One concern is objecti´Čücation: that is, the fear that putting a price on certain things and buying or selling them might move them into a class of impersonal objects to which they should not belong....

  10. Anonymous 8:11pm: I'm not saying everything reduces to economics.

    That's precisely the point of my rant: that the prevailing wisdom is that everything reduces to economics.

    An example from couple of days ago: a friend was going to downsize and leave her house of many years. She said: "All my memories are there, but I am a no-nonsense person: if moving makes economic sense, then that's what one has to do. It's reasonable." Then she did a more careful assessment, and, thanks to the real estate depressed prices, the result was that it did not make economic sense for her to move. She told me, obviously relieved: "So I'm not moving. I'm just going to stay here. I would have moved if that's what the numbers had told me to do, but I am delighted to be staying here!" I say: this person has bought into the idea that everything reduces to money.

  11. I understand your point, the example of your friend moving or not is awful! But blaming economics or economists is not useful. I think that if economists tried to analyze this situation, they would try to give a price to memories and such. In fact, the price of memories might even be deducible from people's suboptimal moving patterns. How repugnant would that be?

  12. For those of us who do not have our dream job, money=time. Or: which proportion of your life you need to sell. Does that make money seem more important?

  13. Anonymous 5:45am, Pascal 8:45am: You have a point. I updated the last line of my post to reflect that.

  14. I think you are conflating two things:

    1. Especially in the US, there is a tendency to rank everything. This produces aberrations: what is "better": studying law, medicine, or Mathematics?

    2. Money is one way of ranking, and then choosing the highest rank. Unfortunately too many people, starting with most economists, identify this specific ranking with universal values.

    3. An economists' way to try to correct this is to monetize also other values--for example pay for pollution, measure happiness by extra years lived, or give money penalties for hours spent in traffic jams. This seems even more preposterous than just ranking things by money--at least then one can argue that money is just one of the possibly many measures of quality.

    An interesting attempt, by an economist, to introduce alternative models is in Yochai Benkler's book, The Wealth of Networks. It is available on the net for free.


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