Tag Archives: freakonomics

Risk saves lives

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Just another in my ongoing rants about something I feel strongly about.  We need to accept a lot more risk in our lives so we can stop spending gazillions foolishly, and start allocating the spending to things that will actually do a lot of good and save a lot of lives here and elsewhere:

 Re: Lead in toys imported from China:

The whole anti china toy thing seems to me to be largely an overreaction and/or  an anti-China political scam.   Our standards are far, far too high here in the USA.    I’d like to see how you can make a case that standards that add billions in costs and save at most a handful of people are appropriate when we could reallocate that risk in such a way that the costs would save thousands of *the very same* people,let alone *millions* in developing world.    Did anybody bother to compare the (trivial) lead and toxics risks from those China toys with risks from wearing street shoes in the home (also probably trivial but not a costly approach to the problem.  And then compare those with the risks most families take by not containing the almost ubiquitous leaded paint on old American homes and by using leaded fuels?   THAT’s a lead risk folks, and it’s big enough to worry about.    Am I saying we should allow leaded toys in from China?   No, but we should not worry so much about these small risks and we should reduce the regulations such that the risks match up logically.    Mad Cow disease posed almost *zero* health risks given the existing inspection regimens, yet many called for *higher* standars to fight that almost immeasurably small risk of human problems from mad cow.  (Pop quiz – how many US people have died from the human complications that come from mad cow disease?)  Answer:  1 or less.   In fact there were only 3 cases of this in US cows! 

Would I vote to put myself and others at slightly greater risk – trivial greater risk – so hundreds of others could collectively live thousands more years?   Of course, it is a moral imperative to work for this.  

Silly people say it’s not a tradeoff.   They suggest we always need to fight for the highest safety standard, and the costs be damned.    That appeals to emotion but is downright stupid in terms of economics.  You *must* allocate resources because they are limited.   You can let whimsy guide you, or emotion, or evil, or logic, but you cannot escape the allocation of resources.   All I’m saying is, to rework and paraphrase John Lennon:

“Let’s give Peace REASON and ROI calculations a chance” 

 We desparately need to better match risk and cost, but political spending and emotion forces us to, for example, recall perfectly good beef and spinach when statistics suggest these were of sufficient quality.    The spinach thing probably led to a few more deaths from lowering dietary standards by stopping eating spinach than the 1? death from the bad spinach.

Google economist on Google’s success: Huh?

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Hal Varian is an economist at Google, and I’m sure he’s a good one.   However his Freakonomics and Google blog analysis of why Google has done so well in search leaves a lot to be desired.    After knocking down a few straw man items that obviously have nothing to do with Google’s search   monopoly   dominance, he goes on to conclude that Google is just better than the competition because they have been doing search for so long.

Hal – Excuse me but you call that economics?    I doubt this would be your internal Google explanation (assuming you want to keep your economics job, let alone your degree).  In fact it was so thin and almost bogusly “cheerleading” that it raises for me the ongoing questions about Google’s questionable mantras about doing no evil and transparency:   Transparency in all things except those that might affect our bottom line!

As I’ve noted ad nauseum I do NOT think Google has more than a modest obligation to be more transparent, but I’m tired of how often Google *witholds information* to protect Google and then pretends this is in the interest of users.  Google screws users and webmasters regularly – this is common knowledge in the search community.   The most glaring challenge is with ranking errors, mistakes, penalties, and rules.   In this area literally tens of thousands of mom and pop websites, and sometimes larger enterprises, are indexed in questionable ways by Google leading to serious economic challenges.   Unlike almost any other business however Google has only a tiny team of specialists who generally can only offer vague and often useless canned information, even when the problems are fairly obvious to an experienced search person.   

But I digress into ranting….!  

My working hypothesis about Google’s success is simple and I think would hold up far better than Hal’s silliness:  Humans are creatures of habit, and Google was the best search at the time when most formed their internet search habits.   Yahoo, LIVE, and even Ask are only marginally inferior to Google search now, but there were dramatically inferior a few years ago when the online ranks swelled with people looking for information.   Google provided (and still provides) high quality, fast, simple results. 

This hypothesis helps explain the following facts:
Google is not the search of China where Google.cn traffic is dwarfed by Baidu.com
Even as Yahoo improved search quality they did not improve their search market share. 
Quality differences are slight, yet Google search share in USA is very large.
 

Another indirect factor in the Google success equation is that Google’s monetization remains superior to the competition by a factor of more than 2  (per Mike Arrington .09 vs .04 per search at Yahoo).   In this monetizing sense Hal’s “we are better from experience” would ring very true, and if he had written about *economics* he would have noted that Google’s brilliancies in monetization are a lot more notable than in other areas, and are more of a key focus area at Google than is generally talked about.    In fact such a focus area that they are downright opportunisic in the effort to monetize the heck out of the searches.  My favorite examples are when Google violates their own guidelines to bring users …. non-information from advertisers.   I ran into this last week with the following search for airline tickets.   

Google Query: “Xiamen to Beijing”

The top result on the left side, which is supposed to be reserved for non-commercial results, at first seems helpful, giving you the ability to order tickets from several places:

Flights from Xiamen, China to Beijing, China

Departing:   Returning: 

CheapTickets – Expedia – Hotwire – Orbitz – Priceline – Travelocity

Unfortunately though, you can’t order the tickets because at least some of those clicks lead to commercial websites that do not offer that route.  

No big deal?  I guess not, but this is a clear violation of the Google Guidelines which call for clicks to a page where you can really get the thing advertised.  Also it would be refreshing for me if Google stepped down at least half way from the high horse of claiming they never put money ahead of users, and more importantly used some of the enormous profits to bring more transparency and helpful information into the mix.

In summary I want to be clear:  Google has the right to make big money online.   They also have the right to be very aggressive in making money.   However with their success goes an obligation for quality communication and transparency.   They are failing in that obligation and perhaps as importantly are not even recognizing that they are failing.   Google is a great company.  But they can do much better by users whose habits have made Google the most successful company of this generation.