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Economics

A collection of 54 issues

Expertise as a Service

The best thing you can say about Prediction Machines, a new book by a trio of economists, is that it is not barren. Most of the green patches you see are about the obvious: the big gain from ML is our ability to predict better, and better predictions will change

The Benefit of Targeting

What is the benefit of targeting? Why (and when) do we need experiments to estimate the benefits of targeting? And what is the right baseline to compare against? I start with a business casual explanation, using examples to illustrate some of the issues at hand. Later in the note, I

The Value of Predicting Bad Things

Foreknowledge of bad things is useful because it gives us an opportunity to a. prevent it, and b. plan for it. Let’s refine our intuitions with a couple of concrete examples. Many companies work super hard to predict customer ‘churn’—which customer is not going to use a product

Optimal Sequence in Which to Service Orders

What is the optimal order in which to service orders assuming a fixed budget? Let's assume that we have to service orders $o_1,…,…o_n$, with the n orders iterated by $i$. Let's also assume that for each service order, we know how the costs

Optimal Sequence in Which to Schedule Appointments

Say that you have a travel agency. Your job is to book rooms at hotels. Some hotels fill up more quickly than others, and you want to figure out which hotels to book at first so that your net booking rate is as high as it could be the staff

Targeting 101

Targeting Economics Say that there is a company that makes more than one product. And users of any one of its products don’t use all of its products. In effect, the company has a \textit{captive} audience. The company can run an ad in any of its products about

Incentives to Care

A lot of people have their lives cut short because they eat too much and exercise too little. Worse, the quality of their shortened lives is typically much lower as a result of avoidable' illnesses that stem frombad behavior.’ And that isn’t all. People who are not feeling

Companies With Benefits or Potential Welfare Losses of Benefits

Many companies offer employees ‘benefits.’ These include paying for healthcare, investment plans, company gym, luncheons etc. (Just ask a Silicon Valley tech. employee for the full list.) But why ‘benefits’? And why not cash? A company offering a young man zero down health care plan seems a bit like within-company

Optimal Cost Function When the Cost of Misclassification is Higher for the Customer than for the Business

Consider a bank making decisions about loans. For the bank, making lending decisions optimally means reducing prediction errors*(cost of errors) minus the cost of making predictions (Keeping things simple here). The cost of any one particular error — especially, denial of loan when eligible– is typically small for the bank,

Raising Money for Causes

Four teenagers, on the cusp of adulthood, and eminently well to do, were out on the pavement raising money for children struck with cancer. They had been out raising money for a couple of hours, and from a glance at their tin pot, I estimated that they had raised about