Modern renditions of Pride & Prejudice, humor edition

Lynne Kiesling

I’ve been reading, thinking about, and watching lots of Jane Austen lately, and I’ve found two funny renditions of my favorite book, Pride and Prejudice: Austenbook, a Facebook-style retelling of the story, and Pride and Prejudice in emoticons. I guffawed out loud in an unseemly manner ill befitting a lady, but I suspect that Ms. Austen would be highly amused if she were a part of our culture.

I haven’t read Pride and Prejudice and Zombies yet, but the KP Spouse has, and he allows that he was excessively diverted by reading its rollicking, light juxtaposition of zombies into the story. He says that the author, Seth Grahame-Smith, does a very good job of using the essence of Austen’s language, and that it’s pretty obvious that Grahame-Smith used the 1995 BBC video version with Colin Firth (yum!) as the skeleton upon which he told the zombie story. I have, though, been enjoying A Truth Universally Acknowledged:
33 Great Writers on Why We Read Jane Austen
, a collection of essays on Austen. All of these are excellent diversions for a winter weekend.

Court dismisses price fixing and price gouging claims filed against four Martha’s Vineyard gasoline retailers

Michael Giberson

A federal court in Massachusetts has dismissed a class-action claim filed against four Martha’s Vineyard gasoline retailers.  The suit claimed the stations engaged in price fixing over several years and in price gouging after Hurricanes Katrina and Rita in Fall 2005.  Defendants argued that pricing patterns observed by plaintiffs were insufficient to support either the price fixing or price gouging allegations.

The Martha’s Vineyard Times has provided thorough description of the case, including articles on the plaintiff’s expert testimony (by Boston College economist Frank Gollop) and the defendant’s expert testimony (by Michael Quinn of the Analysis Group).  In addition, the Times posted selections from expert testimony online.  (Links below.)

My general reaction from reading parts of Gollop’s testimony was that it was very basic industrial organization analysis - all comparative price movements and changing margins – and neglected completely the extensive economics literature on retail gasoline pricing. The law likely makes no special distinction for gasoline pricing cases, so the analysis wouldn’t have to address what is known about gasoline prices, but neglecting the literature may have led plaintiff’s to mistake common retail gasoline price patterns as evidence of price fixing.

The main surprise from looking at Quinn’s testimony for the defense was the revelation that there are nine gasoline stations on Martha’s Vineyard, not just the four defendant stations. Gollop managed to produce a 36 page affidavit, including a discussion of market shares, barriers to entry, the relevant market area and economic substitutes for the defendant’s gasoline with – so far as I was able to find – just one incidental reference to just one of the five non-defendant retailers.  Gollop compares the defendants’ prices to prices on Cape Cod, nearby but obviously less relevant than the five other on-island gasoline retailers. I assume that the plaintiffs studied the behavior of the other on-island stations and found it not helpful to their case, but it looks like a pretty big hole in the plaintiff’s analysis.

The price gouging claim rests almost entirely on Gollop’s calculation that gross margins on gasoline sales at the four defendant stations increased by more than five cents after Katrina, comparing margins in September, October, and November to the margin in August, 2005. Gollop said the five-cent standard was suggested by the FTC’s report on gasoline prices post-Katrina and Rita.

Quinn, for the defendants, observed that patterns in retail prices surrounding Hurricanes Katrina and Rita were similar to patterns in retail prices at other time of wholesale price volatility. And, interestingly, price increases at the defendants’ stations were smaller than the price increases at the five non-defendant stations on the island.  In general he finds the price patterns to be typical of “price-cost dynamics inherent in this industry,” including the rockets-and-feathers effect that has been studied at length by economists.  In short, nothing surprising here (at least to someone familiar with the economics literature on gasoline prices).

Additional information (posted online by the Martha’s Vineyard Times):

Energy storage for electric power systems

Michael Giberson

Sandia National Lab has just published a study of energy storage applications for the electric grid: “Energy Storage for the Electricity Grid: Benefits and Market Potential Assessment Guide.” John Petersen at Alt Energy Stocks said:

I’ve been following the work in progress on this report since last summer and have eagerly awaited the opportunity to shift my focus away from the overhyped electric vehicle sector and focus on something with real meat. It looks like my time has finally come. For technology types that want a detailed understanding of what the various potential utility-scale applications for energy storage are, the entire 232 page report is a must read.

Petersen then provides an overview of the report’s information from the point of view of a potential investor.

Jamie Oliver, children and food, and field experiments

Lynne Kiesling

Several years ago Jamie Oliver set out to improve school food for a group of British children. In part he was motivated by wanting to impart a love of good, healthy food in children by sharing his own joy in food, and in part he believed that healthier school meals would lead to less obesity and better academic performance. As Tim Harford noted in his Undercover Economist column in November:

Oliver’s mission to persuade schools to serve healthier lunches – and get children to eat them, and stubborn mothers not to stuff chips through the school railings – became a national phenomenon in 2005. Tony Blair and David Cameron fell over themselves to jump on the Naked Chef’s bandwagon, and soon everyone in the country had an opinion on the campaign.

Harford then discusses a working paper by Michèle Belot and Jonathan James that uses Jamie Oliver’s school lunch work as a field experiment; from Belot’s web site:

“Healthy School meals and Educational Achievements”, with Jonathan James

Children’s diet is a major source of preoccupation in many developed countries. The concerns have mainly been focused on the implications for obesity and health outcomes. However, the effects of children’s poor diet may extend beyond health; food is an obvious input in the “learning production function” and deficiencies in diet may result in important deficiencies in nutrients playing an essential role in cognitive development. This study exploits a unique experiment in the UK, the “Feed Me Better Campaign” where the meals served in the 81 schools of one area (Greenwich) were changed drastically by the British Chef Jamie Oliver. Because the campaign was literally designed as a large-scale experiment, it offers a unique opportunity to assess the causal effects of healthier food on educational outcomes. We find that educational outcomes did improve in Englsih [sic] and Science, although we cannot rule out small effects. We also find that the campaign reduced absenteeism by 15% .

A well-designed field experiment in economic policy is hard to achieve, particularly because to get a representative distribution among treatments you have to randomize who participates in what treatment, which is politically difficult (I can tell you stories about this in electricity, but it will require a cocktail). This experiment does not randomize, but it does provide a large-scale test with comparative demographics that minimize the selection bias problem. As Harford notes,

The chef had convinced Greenwich’s council and schools to change menus to fit his scheme; he mobilised resources, provided equipment and trained dinner ladies. Other London boroughs with similar demographics received none of these advantages – and indeed, because the programme wasn’t broadcast until after the project was well under way, probably knew little about it. The result was a credible pilot project. It wasn’t quite up to the gold standard of a randomised trial, but it wasn’t far off. …

… Surely what counts is that a new idea was tried out on a respectable scale, and now we have a chance to figure out whether it worked. What astonishes me is that it took a television company and a celebrity chef to carry out a proper policy experiment.

Oliver’s work has led to his receiving a TED Prize for 2010, drawing attention to his work to improve diet, food knowledge and understanding, and cooking for children, focusing on the UK and US. His TED address from a couple of weeks ago is well worth a listen; he does go a bit histrionic for my taste in some parts of it, but his passion for incorporating knowledge about food into education is obvious. And, he knows how to design a policy experiment.

Bloom Energy makes the news

Michael Giberson

Another Silicon Valley start-up out to solve the world’s energy problems, promising “clean, reliable, affordable energy anywhere.”  Sounds good, hope they can deliver.

Today’s energy-problem-solver is Bloom Energy.  The company has been around since 2001, quietly developing what it claims is a new fuel-cell technology, much of it on the dime of Silicon Valley venture capitalists like John Doerr of Kleiner Perkins Caufield & Byers.  Sunday, television news show 60 Minutes provided the first public look at the company and its technology.  Today the company held a news conference officially unveiling its product.

The basic product is a solid oxide fuel cell that produces power by reacting natural gas with oxygen without using combustion.  The process yields water and carbon dioxide in addition to power. The water is reused within the system, the carbon dioxide emitted is less than traditional power plants would emit generating similar amounts of power.

Here are some links, beginning with 60 Minutes and the buzz before the official release:

Samples from post-press conference coverage (which is substantial):

Bloom isn’t the first Silicon Valley-linked company seeking to solve the world’s energy problems.  In fact, that’s a fairly crowded space these days, with and A Better Place and Tesla Motors just a few of the companies making techie-based forays into the world of energy.

Or, a less glamorous example, Range Fuels, a biofuels-based company funded in part by Vinod Khosla, former founding CEO of Sun Microsystems and currently head of Khosla Ventures and a general partner with Kleiner Perkins Caufield & Byers (the  same venture capital firm that employs Bloom Energy supporter John Doerr).  Range Fuels, which peppers its website with quotes from people like Mahatma Ghandi and Albert Einstein, has burned through hundreds of millions of dollars – much of it in the form of government grants – so far unsuccessfully pursuing the goal of commercial production of cellulosic ethanol.  Robert Rapier delivers a run down on the company at R-squared Energy Blog, and it isn’t pretty.

Bloom Energy does have working products in use by customers – companies like Google, FedEx, and eBay – so at least that much is real.  But, of course, fuel cells have been around for a long time. The real question is whether they can produce power at a low enough cost over the lifespan of a unit.  They claim average costs around 8 to 10 cents per kwh, which is competitive relative to retail prices for grid-connected commercial and residential consumers in the United States (rates average about 10 to 11 cents per kwh).  If that claim is substantiated after the company moves the product into commercial scale production and widespread use, then the company will be winner.

Fracking and water quality

Michael Giberson

One of the issues surrounding development of shale gas resources has been concern over the effects of resource development (especially fracturing processes) on groundwater quality.  Congress has initiated an investigation of the practice, for example.

Geoff Styles looks over the issue in “Shale Gas and Drinking Water“, concluding it isn’t likely to be a big deal:

The more I learned about fracking, the more puzzled I became that it has attracted so much criticism recently. After all, the practice was developed in the late 1940s and has been used since then in tens of thousands of wells to produce literally billions of barrels of domestic oil and trillions of cubic feet of domestic natural gas.

… So how do we explain the current ruckus over hydraulic fracturing? Perhaps one reason this old practice is attracting new scrutiny is because it’s being applied in parts of the country that haven’t seen a drilling rig in decades, where it provokes a similar reaction to the arrival of 300-ft. wind turbines, utility-scale solar arrays, and long-distance transmission lines.

The industry doesn’t seem too concerned about the Congressional inquiry, which suggests that folks in the business don’t think that there is anything to be concerned about.

Inside the ERCOT control center

Michael Giberson

David Wagman, chief editor of Power Engineering magazine, toured the Electric Reliability Council of Texas’ primary control center in Taylor, Texas as part of a group attending the Renewable Energy World Conference in Austin.  If you wonder what ERCOT’s control center is like:

Inside the control room, the most striking feature is the lack of noise. The room, which must be 50 by 50 with a 35-foot ceiling, is library quiet. And that’s the way they like it, Joel Mickey told me in a video interview I filmed with him and which will be on this web site in the near future. Anything else suggests a system that’s out of balance or with a problem. Eight people work in the control room, responsible for everything from day-ahead forecasting to on-the-spot transmission balancing. Each has a bank on consoles.

The front wall consists of a massive projection screen with perhaps a dozen displays showing the grid and various real time operating conditions. Two digital displays at either side of the room report the current load, the time and the system’s cycle. Those numbers in particular move up and down within a narrow range around 60 cycles. Every four seconds the control center pulses commands to generating units around the state, commanding changes in generating output up or down to keep 60 cycles in the center of the target.

More at the link, including some description on how wind power is changing the system operator’s job.

(HT to the Caprock Plains Wind Energy Association.)

Tickets into the olympics

Michael Giberson

Ticket scalping, like price gouging, is a usually pro-social market activity that is stuck with a pejorative name.  At Swifter, Higher, sportswriter Kyle Whelliston writes about his experience picking up a cheap ticket into the first hockey game of the Vancouver Olympics.  It wasn’t as easy as he hoped, but at a cost of missing the first few minutes of action he was able to get a price he liked.

What surprised me in the article was how well organized the gray-market activity was. I wonder whether the Olympics would increase or decrease overall ticket revenue by facilitating an active secondary market (assuming a secondary market was legal in the host country).

(Via Freakonomics blog.)

Information costs and snowfall data

Lynne Kiesling

Here’s a paper that befits the snowy month we’ve had in the U.S. … Jonathan Zinman and Eric Zitzewitz at Dartmouth find that ski resorts over-report snowfall, and that the proliferation of iPhones has led to more consumer information on accurate snowfall and ski conditions. The paper abstract:

Casual empiricism suggests that deceptive advertising is prevalent, and several classes of theories explore its causes and consequences. We provide some unusually sharp empirical evidence on the extent, mechanics, and dynamics of deceptive advertising. Ski resorts self-report 23 percent more snowfall on weekends; there is no such weekend effect in government precipitation data. Resorts that plausibly reap greater benefits from exaggerating do it more. We find little evidence that competition restrains or encourages exaggeration. Near the end of our sample period, we observe a shock to the information environment: a new iPhone application feature makes it easier for skiers to comment on resort ski conditions in real time. Exaggeration falls sharply, especially at resorts where iPhones can get reception.

This kind of empirical economic research is particularly valuable, because it highlights the role that technology can play in enabling the aggregation of dispersed information, which better enables reputation mechanisms to discipline otherwise deceptive behavior. In many contexts this combination of technology and diffuse information feeding into a reputation mechanism provides more effective regulation than some form of centralized, government regulation. Imagine, for example, a law requiring ski resorts to report accurate conditions, with an entire agency established to monitor and enforce their compliance. Likely to be much more expensive, and less effective, than the simple threat of losing weekend business!

Hat tip to Salon article on the research.

Vehicle-to-grid income and analysis

Michael Giberson

If you are already a rock star and can’t imagine doing anything else, then “money for nothing and your chicks for free” may be a reasonable characterization of your situation.  On the other hand, if you’re a teenage boy picking up a guitar and hoping to attain wealth and women, you should consider the start-up costs involved.  Some discussions of “vehicle-to-grid” (V2G) revenue potential seem a bit like the “money for nothing and your chicks for free” kind of analysis.

Consider the Financial Times article, “Grids to Harness Power of Electric Cars,” a story that builds on recent V2G presentations at the American Association for the Advancement of Science meetings in San Diego.

The first experimental V2G system has just gone live at the University of Delaware, where three electric cars are connected to the grid whenever they are not being driven. “They are making five to ten dollars a day just by being plugged in,” said Kenneth Huber, technology manager for the PJM grid, which covers the mid-Atlantic states.

The two-way connection not only pulls in power to recharge the battery but also sends electricity back to the grid. V2G vehicles work like an electrical sponge, absorbing excess energy when demand for power is low, and returning some to the grid when demand is high, said Willett Kempton, project leader at the University of Delaware.

…  Prof Kempton says his project suggests that an investment in V2G technology could pay off very fast for an electric car owner. Once the technology is commercialised, the additional costs of fitting a V2G-enabled battery and charging system would be about $1,500 – and the owner could make $3,000 a year through a load-balancing contract with the grid.

V2G is economically viable because electric car owners are buying batteries anyway, so it makes sense to use them for communal energy storage. It would be much more costly for electric grids to install stationary battery banks or other storage systems dedicated to load balancing.

It is dangerous to leap to conclusions based on a newspaper summary of research, but the characterization above suggests that a few assumptions may be key.  The assumption that “electric car owners are buying batteries anyway” may mean that the V2G analysis treats the battery as a free resource, and so compares V2G revenue estimates just to the incremental costs of V2G capability and operations.

I suppose it is a perfectly reasonable assumption for anyone who is going to buy an electric car anyway, and then is considering adding V2G capability. If, on the other hand, the intention is to advocate V2G revenue possibilities as an inducement to buy the electric car in the first place, a more inclusive analysis seems reasonable.

(For more on Dire Straits, “Money for nothing”: YouTube, Songfacts.)