A subsidy by any other name

One of the most self-serving fallacies I've ever seen is the idea that a subsidy can only exist on the spending side of the ledger.  I see this argument popping up more and more, and it annoys the crap out of me.


The fundamental definition of a subsidy is any form of government support that allows a firm or product to be sold at below the efficient, market-clearing rate.  Exactly what that market clearing rate is can be up for debate, depending on how many externalities one takes into account.  However, it's a decent proxy to say that a subsidy is any type of explicit government support, where one type of firm or product is intentionally favored where no favoritism existed before - this definition, at least, avoids any debate over what the market clearing price level is given that most goods and services are taxed, regulated, etc. away from an efficient market rate.

The argument I've heard from certain GOP* commentators is that a subsidy can only be a government payment, soft loan, or other type of spending support.  Rather than engaging the economics directly, they tend to focus attention on one of two arguments.

TANSTACN

There ain't no such thing as carbon neutrality.

Or, at least, exceptions to that rule are few and far between.

Besides scarcity, greenhouse gas emissions are the second major concern with our current sources of energy.  But one of the most frequent fallacies I encounter is the contention that if any alternative source also produces a greenhouse gas at all, or does not have a negative carbon balance,  it is somehow not "green" or is just as bad as using fossil fuels.

Convergence, or, energy is a high yielding investment until it isn't

This will be a rambling post just to help me get some thoughts down. 

With the recent announcement that Chevron is essentially pulling out of all biofuels and renewables, I think it's worth noting some of the unrealistic expectations that Chevron placed on clean technology.  Most notably, Chevron placed clean tech processes in direct competition for investment money with its oil exploration projects.  Thanks to some of my work in graduate school from some of the best industrial practitioner educators I've ever had, I know that the IRR for a typical conventional oil exploration project is on the order of 20%. 

The corresponding number for a bio-renewables project is much lower, on the order of 3-7% for the very best.  This is much more typical of what you would see in agriculture.  Placing investment money for bio-renewables projects in competition with oil projects, it's easy to see why bio-renewables lost out.

Besides making me profoundly disappointed in Chevron, this kind of news, to me, points to where the future of energy will go.  If you accept that the world cannot indefinitely continue to power itself with petroleum-based transportation fuels, then eventually the IRRs of bio-renewable projects (or other types of renewable energy) must approach those of oil.  This can happen in one of three different ways.

On the side of petroleum, either the number of opportunities for highly profitable ventures will decrease (a supply-driven slump) or there will not be enough demand to sustain these ventures at a high level of profit (a demand-driven slump). 

On the other hand, a second option is for bio-renewables to decrease their costs, increase their IRRs and compete with petroleum on its own terms.


I've staked out my position on demand destruction before, and I still believe that the structural changes that might cause fuels demand to decrease in the same way the IEA and others claim will take decades longer than they predict.  That environment means that high prices will continue, and supplier costs will increase as profitable opportunities for exploiting petroleum become depleted - in short, a petroleum supply driven argument.   Something like a carbon tax would also help that along, by seriously affecting the economics of bitumen (somewhat less for other forms of unconventional oil, such as tight oil). 

As for bio-renewables, after seven years of active work in the area, two of them professionally, realistically I can't see the IRR of any project improving much beyond that 3 to 7% level.  Making a low-value product like a fuel just doesn't pay, not when there is the opportunity to avoid the cost of gathering your energy source (i.e. the sun, collected on land) by going with petroleum.

In the end, there will be convergence at some point, when a bio-rewables project and slurping up dead dinosaurs become equally attractive.  However, there are too many physical limits to bio-renewable feedstocks to make them more competitive.  Instead, the point at which convergence will occur will be when energy as we've known it for the past three quarters of a century is no longer a high yielding investment.

Reflections on Political Correctness and Israel

In my previous post, I briefly referenced not liking a meme rather unfortunately popular among the American right.  In brief, it claims that the liberal media, in kowtowing to the desires of minority groups, left-wing causes (such as, for example, illegal immigration, gay rights, and the like) are mired in an atmosphere of "stifling political correctness" that prevents anybody who does not share the liberal views of said media from expressing themselves.  Although the view is appealing to those with unpopular views, it has several problems.

The first problem is that in order for the thesis to be true, you would have to see editorial policy actively discouraging the publication of conservative viewpoints.  Instead, conservative views are regularly aired in so-called liberal media.

Second, the entire idea of an atmosphere of political correctness as "stifling" implies that the media themselves are to blame, when in fact the media are simply covering their bases in response to criticism.  This criticism comes not from the management of the media itself, but from the audience.  In other words, crying foul at "stifling political correctness" smacks of whining about receiving criticism because one's words offend.  It confuses the negative right to free speech - i.e., that no entity can stop one's words from being heard - with the positive right of preventing others from judging your words.  It's not a cry for "freedom to," but for "freedom from."

I suppose it's been easy for me to hew to this opinion for much of my life because by and large, I've never been on the receiving end of such feelings of persecution.  Recently, however, the incident with the BDS and Brooklyn college (and yes, I know I'm 2 months late) made me nuance this view.

The difference between skepticism and disbelief

One of the myriad subjects that's been bouncing around my cranium recently has been the nature of scientific skepticism.  I suppose I should admit what brought this about: one of my housemates is an alumna of Bowdoin College, a liberal arts college in Maine, which recently came under attack by the Neocon pressure group National Association of Scholars for exemplifying what they believe has "failed" about modern liberal arts education.  Reading the report is a sometimes hilarious, sometimes soul-crushing reminder of the non sequitors that build up in a movement that only listens to itself*. But rather than dismissing the entire report as simply another episode of "Those Neocons say the darndest things!" I found myself thinking about one point that was often (shrilly, bleatingly) raised.  I am paraphrasing, but the report repeatedly implied that Bowdoin failed to teach students any sense of academic skepticism using two different examples: first, by proceeding from an unexamined assumption that gender is an inherently social construct (rather than being determined by "biology") and second, by not teaching any of the controversy over global warming.

I don't want to discuss either of these issues in this post.  Instead, I want to discuss how the nature of skepticism in each of these issues is different, and why it's impossible to apply the label of "skepticism" as expressed by the anti-AGW movement to scientific issues like climate change, the safety of GMO foods, or many other inherently technical controversies.

Thoughts on Feminism

There was a recent comment thread in Marginal Revolution (original post here) in which a guy (who goes by the handle Tom West) gave a very illuminating perspective on modern feminism and feminist politics that I felt compelled to share. I've reproduced the thread at the end of this post, so you can read it there first or find it on MR first.  It's one of the first few comments.  Either way, I really want to just jump into discussion here.

Let me preface all of this by saying that as the proud carrier of a Y chromosome with an expressed SRY region, I've never fully understood the underlying drivers for the modern feminist movement - nor will I.  My introduction to modern feminist politics was the furor over Larry Summers' resignation in the early spring of 2006.  Summers' speech didn't seem at all inflammatory to my eyes.  To me, the budding scientist and researcher, what Summers suggested was (among other things) an extraordinarily simple, plausible testable hypothesis: that there exists some innate aspect women and men's intellectual capabilities that, statistically, predisposes either gender to have some level of over-representation in certain fields.  Other things Summers mentioned were also proven statistical correlations, including that women with a certain level of education in the United States tend to marry men of an equal or greater level of education.

Yet, all of my feminist friends - even ones that were normally lukewarm about advocacy - seemed up in arms about the speech.  I wondered why, and didn't understand, not least because I felt that the statements were very properly given with caveats and an emphasis that the correlations were a necessary but not sufficient condition for causation. Worse still, when I tried to defend Larry Summers' propositions as reasonable*, I was attacked - not criticized, but full-on ad hominem attacked - by people I considered my friends.  In later years, in the rare instances the topic was brought up, the same situation repeated itself; eventually I learned to avoid the topic altogether.

All this, and other instances, led me to negatively categorize the behavior of the modern feminist movement as hypersensitive and too willing to allow ideology to trump any empirical evidence, especially if the hypothesis in question suggested any innate differences between men and women (beyond the physical, of course). 

None of it quite made any sense until I read the refreshing explanation from the MR comment thread.  "Tom West" sums it up quite succinctly;

Feminism, in general, seems aghast at even acknowledging a lot of innate gender differences.
 
Perhaps. But lets face reality. The fight for equality is a political battle on both sides. And most of us realize that acknowledging that ‘nature’ has any part in current inequality has historically and will continue to be used as a weapon to go *far* beyond that nature to try and force all women (and men) into roles that they might only statistically tend towards. Man likes to categorize, and we are continually insisting that any statistical correlation above 0 must be 1.

So, if you know that acknowledging that a given ratio might actually be 0.4 and 0.6 will be turned into a very politically effective argument that the ratios must be mandated as 0 and 1, you can be forgiven for claiming the ratio is 0.5 and 0.5 despite some evidence to the contrary. It also doesn’t help that in quite a number of cases, it turns out the accepted wisdom is pretty much wrong, and once we conduct experiments to eliminate the cultural component, results between genders are far closer than original experiments indicated.

Suddenly, a lot of things started to make sense.  It makes sense, for example, that if I start talking about innate gender differences, I am suddenly mistaken for one of the gender-roles-are-hardwired crowd.  I am aware that statistical differences in the intellectual ability of genders are smaller than is commonly believed, and that even these statistical likelihoods does not change the likelihood of extraordinary individuals existing from a group that might have a lower aptitude on average.  In fact, I have firsthand experience (by virtue of my college) of extraordinarily talented individuals of both genders in roles seen as the preserve of the other.  But my arguments largely appear the same as those who don't have this understanding, and routinely use "nature" arguments to pigeonhole women into their traditional roles.

That, in a sense, explains the visceral reaction that "nature" arguments tend to get, even from people like me that acknowledge the problems that the feminist agenda wants to solve.  One of two misunderstandings will happen when someone with a well-grounded, empirically valid understanding of innate gender differences pitches an argument to a feminist: either a subtle distinction or clarification is lost in conversation, or, more likely, the argument will be functionally identical to one made by some clod who thinks that the underlying relative correlations with ability are closer to 0.9 to 0.1 than 0.5 to 0.5.  Either way, the feminist assumes (not unjustifiably) that the underlying assumptions are sexist, and then proceeds to chew the other guy out.

The case of a cautious and well-versed proposer being chewed out is a good example of a type I error, in which the feminist response assumes that the proposer has wrongheaded biases where they do not exist.  Unfortunately, the reason that it's so hard to dissuade people from making the assumptions that lead to type I errors in my case, and probably Larry Summers' case as well, is that most of the time the assumption is valid.  Most people who make the innate differences argument are drawing fantastically wrongheaded conclusions from equally fantastically wrongheaded estimates of what the true statistical differences in ability are.  These estimates are informed not by familiarity with the literature but by cultural and social biases.  In other words, the type I error occurs because most people who propose this position just use the possibility of natural variation in intelligence between genders as a vehicle for their own preconceived notions of gender roles.  A good portion of these people will also deny the existence of outliers who can perform just as well in non-traditional gender roles as they could in ones seen as the preserve of the other.  Either way, it's disgusting and all-too-frequently the case.

As Tom West put it in a later response:

... my personal experience with teachers (teachers!) who took a certain Harvard president’s words as “proof” that women can’t do math made me pretty sensitive to the reality that people work hard to misinterpret tiny factoids to make them into giant edifices that can have profound effects on many, many others. It’s certainly left me sympathetic to those who want to err on the side of assuming more equality of nature, especially given the uncertainty in any claims as to what’s nature and what’s culture.)

So like Tom West, I'm now much more sympathetic to feminist movement's tendency to discredit or attack gender-based intellectual ability claims.  I have personally been hurt by the calculus that goes into making that decision, and at least partially because of that I disagree with the strategy.  But I also recognize that introducing subtlety into arguments allows the opposition to claim that feminists actually agree with them, and agitate for the hell of it, or some other bullshit argument.  Refuting that claim takes careful presentation of facts, and sound bytes count for far more than facts in politics.

* I have to emphasize here that my working assumption is that intellectual ability is roughly equal until proven otherwise.  The values suggested by literature - even with statistically significant results - all point to differences that are too small in most categories of intelligence to justifiably change that assumption.


Full source thread after the jump:

Why I (mostly) drive below the speed limit

(Updated 2/19/13 - see below)

Although it's not at all obvious to most, the speed you drive has a highly significant effect on the fuel consumption of your vehicle.  The key is the drag equation, which is an approximation of the drag force on an object moving at high speed (relative to the characteristics of the fluid in which it's moving - more on that later).

The drag equation is

where F represents the force, rho is the density of the fluid, v is the velocity of the fluid with respect to the object (in the case of a car, it's equivalent for us to consider the car in motion and the fluid stationary), and A is the cross-sectional area of the surface relative to the fluid - for us, the "face" of the car moving into the "wind."  The C term is the drag coefficient, which is a "fudge factor" that's usually determined empirically and depends on the properties of the surface, its shape, and the properties of the fluid*.

The key to take away from the drag equation is that the drag force depends on the square of velocity.  However,  if we want to talk about fuel consumption (call it gasoline in gal/min), we're going to need to move beyond just the drag force.  We can compare gasoline consumption at different speeds by using the energy requirement of your car, in, say, horsepower.  Horsepower is a power term (in case the name didn't make it obvious), meaning it expresses some amount of energy expended over some period of time**.

We can relate the force to the power required to overcome it by using the definition of work (a force exerted over a distance) and diving by the total time.  Since the distance over which you travel divided by the time over which you travel is your average velocity, this gives the power equation above***.  Note now that the power is proportional to the cube of velocity.

So now, onto why I drive below the speed limit.  One fine day I was driving from Ithaca, NY to Syracuse, NY, on the I-81N out of Cortland.  The road is pretty boring except for the occasional deer, so I did some mental math.  Because the fuel consumption (power) required from my car to overcome drag is proportional to the cube of velocity, the ratio of fuel consumption at, say, 75 mph vs at 65 mph is simply (75^3)/(65^3). 

The ratio turns out to be about 1.54.  This means that to a first approximation, at 75 mph I was consuming fifty percent more fuel than I was at 65 mph! Ouch.  I knew that on country roads, my Subaru got about 23 mpg at 65 mph, which means that over a 60 mile drive at around 65 mph it'd consume roughly 3 gallons.  At 75, it'd be consuming 1.5 more gallons. But wait - I was saving time by driving faster. Was my time worth it?

This calculation was easier - between 75 and 65, over the course of an hour it'd take (60/75) hours (0.8 hours, or 48 minutes) to go at 75 mph versus 60/65 hours (0.92 hours, or 55 minutes and about 20 seconds) to go at 65 mph.  How much was 7 minutes of my time worth?  At the wages I was working at that point (about $15 an hour), $1.75.  How much was 1.5 gallons of gas worth? At that time, roughly $6.

I decided to drive slower.  However, on the way back, I had my girlfriend, which meant I, ahem, valued the time saved from driving faster more.  I drove faster on the way back.

To this day I've yet to make enough money in hourly terms to justify regularly driving 75 mph over driving 65 mph on the highway.   At the current average gasoline price in New York state ($3.92/gal), I'd have to be making $50.40 an hour to justify it, which for a standard 8-hour work week is $104,832 per year.

------

This analysis is relatively simple.  There are a couple of (to my mind, anyway) interesting little wrinkles to this calculation, the magnitude of which I can't calculate off the top of my head but I think on balance points to even more fuel consumption at higher speed.

The first wrinkle occurs when we relax the assumption that the drag coefficient is the same at different velocities.  Earlier, we assumed that the drag coefficient is the same at 75 mph and 65 mph - at least, I didn't call attention to the variation, which means I assumed the drag coefficient was the same.  If we relax that assumption, it turns out that there's an additional velocity dependence in the drag equation.  The drag coefficient is proportional to some power of the Reynolds number, which for an object moving through fluid is proportional to velocity.  Usually the expression is something along the lines of C_d = k*Re^a, where k is some constant that's empirically determined and a is some number below 1, also empirically fit.  So the power equation is actually proportional to velocity to the (3+a) power.  So power required to overcome drag force is actually somewhat higher because of this effect.

The second wrinkle occurs when you consider that an engine doesn't linearly deliver horsepower with increasing fuel consumption.  Engines have power curves that describe their performance given the acceleration they must deliver and the rpm they are already moving at.  A power curve for the motor on a Kia Alto (a small car) is shown below:

 

Fuel consumption is the bottom curve (PS is a German abbreviation, common in the car industry, for metric horsepower).  Most cars will operate in the downward sloping part of the curve (we usually change gear if we're not), which means that if we increase speed and don't change gears, fuel consumption per amount of energy delivered actually goes down.  However, we're still delivering a much higher amount of energy, and the ratio varies (in the region we're likely to see) from about 4.5 to maybe 3.25.  In reality the difference in engine RPM is likely to just be the ratio of the velocities, 75/65 or about 1.15, while the fuel consumption ratio occurs over a much larger range (about 3.5).  Still, it means that the fuel consumption at higher velocities, all things being equal, is lower than we might expect because fuel consumption increases less than linearly.

Finally, we have to consider that engine work is also used to overcome rolling resistance in addition to drag.  Rolling resistance is a subject that I don't have any experience in, but I know that for a car it generally increases at a much higher than one-to-one rate with applied torque.  This has much more to do with the way the wheels interact with the pavement then the way bearings behave; at high speeds there's some slippage and the like that cause inefficiencies.  If it were the bearings alone, we'd actually expect less resistance as speed increases because bearing lubricants tend to be shear thinning.  But all in all, this causes required power and hence, fuel consumption to increase at higher velocity more than we would expect from drag alone.

edit: Thanks to a lively discussion with my friend Tom, here's some more interesting stuff:

Tom calculated that the optimal speed at my then wage of $15 by minimizing the total cost of a 60 mile journey:

Cost(v) = Gas cost + Time Cost
C(v) = (60/23) gal*$4/gal*(v^3/(65mph)^3) + $15/hr* 60 miles/v
C(v) = $10.43 * v^3/(65 mph)^3 + $900 mi/hr / v

The local minimum for this can be calculated with some basic calculus, but we were lazy and used Wolfram Alpha:


This means that my optimal speed at that wage, assuming that the drag force dominated my costs, was 53 mph.  It turns out that's a pretty darn good assumption.

Thanks to some quick googling, I found the following diagram (which is given for a parcel truck):

Rolling resistance increases with a relatively low order with respect to velocity while aerodynamic drag has (as we've discussed) a very high order with respect to velocity.  Thus at high speeds it's a bit tricky to discuss aerodynamic drag as the only force, but it isn't an overwhelmingly bad assumption. Note that on the above graph, the curves stop at about 120 kph which is about 75 mph.

All in all, a fun physics problem.


* The drag coefficient for most objects is close to 1.  It's a measure of how close the object is to representing an ideal object for modeling, usually something like a cylinder of infinite height or some such.  Most objects don't deviate much from that - hence, the coefficient doesn't modify the ideal equation much.  For cars, though, a considerable amount of R&D goes into making that drag coefficient lower.  In terms of fluid properties, however, it's also related to the Reynolds number, a dimensionless quantity that is related to the inertia of a fluid (usually involving the velocity) and the viscosity.

** It's easy to get confused about what quantity to look for when talking about fuel consumption, but we can review the units to double check: fuel burned releases energy (in joules) over time (min), while force (Newtons) must be multiplied by distance (Newton*meter = Joule) and divided by time (min) to produce an equivalent quantity.

*** Strictly speaking, if we wanted to be precise then the power equation should be given by d/dt(F_d \dot x), where F_d and x (the distance) are both vector quantities and d/dt is the differential operator with respect to time.  This gives the instantaneous power consumption, which given the data for a whole trip can be averaged out taking into account all acceleration and deceleration and the like.  However, for a rough comparison of fuel consumption at constant speeds it's not necessary.