So here’s what you do. You give a baby (8-12 months) a toy. Then you put two boxes in front of the baby (call them box A and box B). Then you take the toy away from the baby and put it in box A. The baby will then open box A to find the toy. Easy enough. So you do that a few times, and then you switch it up: put the toy in box B. The baby doesn’t understand that when the toy goes in box B that means it won’t come out of box A anymore, so it reaches for box A again to grab the toy. Obviously the toy isn’t there.
Here is a video of this.
scienceblogs via Cheap Talk
A new academic article in Real Estate Economics turns this conventional wisdom [of “why throw your money away on rent when you can use that money to own?”] on its head. Using data from 1979 to 2009, the authors demonstrate that renting was the superior investment strategy for most of the past 30 years. Counterintuitive as the finding may be to some, it is actually quite logical. Unless someone possesses the cash necessary to buy a residence, he or she will be renting one way or another. The choice is between renting the property directly or instead renting the capital necessary to buy the property. The amount of capital to be rented is a function of house prices, while the bulk of a mortgage payment is interest, which is the rental payment on this capital. After 2 years, the typical 30-year amortizing mortgage balance has been reduced by less than 3%. This means that a household that took out a $300,000 mortgage with a 5% interest rate to buy a home has only reduced its mortgage balance by $8,600 after two years despite spending nearly $39,000 in total over this period. […] To put this change in concrete terms, imagine a two-bedroom, 1,800 square foot condo. In 1999, it required a $1,200 per month mortgage to buy, compared to a $1,000 monthly payment to rent (a price-to-rent ratio of 1.2). For the price-to-rent ratio to increase by 2.2-times over this period it might have cost $3,000 a month (in mortgage payments) to buy the property in 2006, compared to a $1,100 monthly rent payment. In retrospect, it is remarkable that it was the household spending $1,900 per month less to live in the same property that was considered to be “throwing money away.”
That’s not even counting property taxes, hiring a real estate agent (no offense Kory), etc etc etc.
How To Live In A Simulation by Robin Hanson
This brings us to the intriguing premise of many recent movies, including The Matrix, 13th Floor, Truman Show, and Dark City: what if people in the future create role-playing simulations where the people in it do not know that it is a simulation? This premise naturally leads to a premise even more thought-provoking: future people might create simulations of a world much like our world. If so, how sure can each of us now be that we are not now living in a such a role-playing simulation?
Obviously we cannot now be sure that we are not living in a simulation. The more likely our descendants are to be rich, long-lasting, and interested in simulating us, the more simulations of people like us we should expect there to be on average, relative to real people like us. And so the more we expect our descendants to be rich like this, the more we should expect that we are in fact living in a simulation [Bostom 2001].
[…] Let us therefore consider in more detail how your decisions should be influenced by realizing that you might live in a simulation. To do this we will need to say what we mean by “should”, and we will need some way to estimate what sorts of simulations we might live in, if we live in a simulation.
In sum, if your descendants might make simulations of lives like yours, then you might be living in a simulation. And while you probably cannot learn much detail about the specific reasons for and the nature of the simulation you live in, you can draw general conclusions by making analogies to the types and reasons of simulations today. If you might be living in a simulation then all else equal it seems that you should care less about others, live more for today, make your world look likely to become eventually rich, expect to and try to participate in pivotal events, be entertaining and praiseworthy, and keep the famous people around you happy and interested in you.
The only thing that I would like to ask Robin Hanson (maybe I will email him and ask) is why a simulation would include so many of the behaviours that I have that I never tell anyone about. For instance, I made a point of memorizing all the keyboard shortcuts on the customer records management software that I use at work. I am very good at navigating that software system without touching the mouse. That is a fact, and it affects literally no one. This is the first time that I have ever mentioned it (perhaps my mentioning it right now nullifies this point but bear with me). Why would a simulated me have such an inconsequential trait?
The purpose of this study was to gain an understanding of the bank shot and ultimately determine the optimal target points on the backboard for the bank shot in men’s basketball. The study used over one million three-dimensional simulations of basketball trajectories. Four launch variables were studied: launch height, launch speed, launch angle, and aim angle. The shooter’s statistical characteristics were prescribed to yield a 70 percent free throw when launching the ball seven feet above the ground with 3 Hz of back spin. We found that the shooter can select a bank shot over a direct shot with as much as a 20 percent advantage. The distribution over the court of preferences of the bank shot over the direct shot was determined. It was also shown that there is an aim line on the backboard independent of the shooter’s location on the court. We also found that at 3.326 inches behind the backboard, there exists a vertical axis that aids in finding the optimal target point on the backboard. The optimal target point is the crossing of the vertical axis and the aim line that is in the shooter’s line of sight.