The Trolley Problem Revisited

The trolley problem, a cornerstone of ethics thought experiments, is often used within hypothetical scenarios we are unlikely to ever have to face. A new application created by a team of researchers at MIT alters this norm. The ethics of technology solutions and their interactions with humans is an increasingly important field to consider with human programming determining, in some cases, choices that can take life away. The example used in this Moral Machine relates to the phenomenon of self- driving cars.
Users are invited to make judgements in a number of situations given the event of a self driving car experiencing brake failure leading to unavoidable casualties; the only choice is who will be killed. So far, this research has gained 40 million contributions from people over 233 countries, allowing for detailed analysis of preferences and decisions. The strongest preferences, (reassuringly) placed human life over animal lives whilst also seeking to save the most lives possible. Weaker preferences valued female life over men and actively reacting rather than remaining passive. (see below for the economists complete breakdown of preferences)

The ethical implications of indirect programming are illustrated to a particularly unsettling extent within this experiment, not least due to the explicit ranking of human value required in many decisions. With no definitive guide on the 'right' way to protect life, the responsibility lies in the hands of policy makers to proactively legislate in a rapidly automating world. Remaining on a legislative back footing as has remained apparent with a persistent lack of precedent or law on how to sanction crimes taking place on online platforms, threatens the efficacy of government within a modernised world. Thus the use of such tools, even the more informal online game, can provide useful guidance in navigating the new requirements of ethical programming.
Try the game for yourself here: http://moralmachine.mit.edu/

The Gender Investing Gap

To me, finance always meant stock markets, shareholders, dividends and other ominous words that I could maybe define, but didn’t really understand. I just realized this when a friend of mine asked me (after I finished my first year of studying economics) what the stock market was. “Yes”, I thought, “I know this”, thus began 10 minutes of me stammering about interest rates, investments, savings and the circular flow model. I could recall what I learned at uni, but when he asked me specifics, like who invests in what and how that actually works and what the bank gets, I wasn’t sure either. Society just assumes you know how to do your taxes, invest or save your money, but there is barely any effort to explain it to young people. Recently I listened to this episode of NPR’s The Indicator (a mini version of Planet Money) and found out - to my surprise - that for many women this is an issue throughout their adult life.

On the episode Sallie Krawcheck - who worked successfully on Wall Street for many years - spoke about the Gender Investing Gap. Basically, we have all heard about the Gender Pay Gap (women make 78ct to every dollar a man makes ), but as it turns out women also tend to invest much less of their money leaving them with fewer savings once they retire. Krawcheck explains this in greater detail and comprehensibly in this post for "Ellevate Network" or you could listen to the podcast if you want to know more.

Here’s a quick overview of her argument:

  1. Why is it a problem women invest less?
    First, we miss out on earning interest on that money over time and second, inflation reduces our purchasing power. The rise in relative prices (inflation) means that you have the same absolute amount of money, but because prices have gone up you can effectively buy less with it.

  1. Why should I want to invest?
Your goals in investing money can be diverse, you could want to save for retirement but also for some big event or project (like a wedding or a car). The reason I find most convincing, is what you can call “f*ck you money”. It’s like a financial safety net that lets you say the f-word to the job you hate and have a cushion to fall on to while searching for new employment. Sallie Krawcheck also calls this also calls this "take your hand off my friggin' leg" money; it can give women the power to leave uncomfortable work situations.

To answer why the Gender Investing Gap exists, you might want to turn to the financial sector itself. Even today women only account for 18% of jobs in finance and if you put the words “investment banker” into google image search an endless void of men in suits awaits. You can imagine different reasons why there are fewer women in finance; there’s a stereotype of women being worse at math, finance is portrayed in media as a men’s club (remember Wolf of Wall Street?) and working hours are highly inflexible. All this can be received as signals of discouragement to women to even think about choosing this career path. Coupled with the stereotype that men take care of the financial household, this might start to explain the gender investing gap. But, Krawcheck says, 90% of women manage their financial household themselves at one point in their lives, so women do control their money and thus, could invest.

We should educate young people (girls and boys) about finance and increase their financial literacy so they can make smart decisions for their future. And we should make finance more accessible to women, something that Sallie Krawcheck is now doing with her company Elle Invest, which focuses on investment support for women.
The company’s report “Mind the Gap” is free to download and has interesting and important information on not only the Gender Pay and Investing Gap, but many more. It is written comprehensively and features some info on Beyonce as well as John Oliver, so you should read it (or just the chapters you’re interested in) to see why investing in and as a woman is important for your future (and also, not as hard as one might think).


The Economics of Tulips

When considering the overlap of tulips and economics, you might imagine it could be encapsulated in a simple Venn diagram:




or maybe at the most:


Despite these opening thoughts, tulips, and in particular, the Dutch Tulip Mania in the mid seventeenth century, can provide a useful lens through which economic bubbles can be understood.
Tulip Mania saw contract prices for bulbs of the increasingly fashionable flower inflate rapidly before the 'bubble' of interest burst and these prices crashed. This event is regarded as the first instance of a speculative bubble. Before diving into the world of tulips, I will attempt to decode some economics jargon; the term 'bubble' refers to the rapid increase in prices of a particular asset, due to the belief of speculators that these prices will continue to rise (and thus hold the potential for profit). This phenomenon highlights an element of fragility within our systems of transactions. Perhaps intuitively, a supplier can sell a product only up to the price point consumers are willing to pay. The implications of this illustrate that our interactions within markets (our decisions to buy and willingness to pay) impact the pricing decisions of suppliers; our valuation of the worth of a product or asset indirectly relates to the value determined through the monetary price. This relationship between consumers or investors and the products they are seeking to buy means that mere speculation as to an asset becoming more valuable can increase its price, this effect is amplified when increasing numbers of people, or media outlets echo these predictions. The value attached to the asset in question is no longer just its present worth to whoever owns it, but also the future potential gain for the owner.
(See below for an infographic I created explaining the rise and fall of these bubbles)

Lets see this happen with tulips:
When tulips were first brought into Europe, they were uniquely bright, and soon became associated with symbols of status in a Holland experiencing a Golden Age of growth and prosperity. The exoticism of tulips made them a luxury item and soon a market grew for selling 'futures contracts' of tulip bulbs during the dormant period of growth. The rise in popularity illustrated a shift in how much consumers were willing to pay, causing prices to rise. The nature of selling contracted rights to bulbs meant that no goods were exchanging hands, leading to the label windhandel, or wind trade. By the winter of 1636-7, bulbs were changing hands up to ten times a day, without any actual fulfilment of the contract. At a peak of Tulip Mania, buying the contracts to 40 tulip bulbs cost 100000 florins, with yearly income of labourers falling around the 200 florin mark. The devolution of tulip bulb sales from a motivation of seeking to obtain a luxury good, to purchasing the contracts in order to sell them on at a later date was ultimately unsustainable, reaching the inevitable point where those in possession of a contract struggled to find anyone willing to pay the offered price. This caused the speculative bubble to burst, requiring government intervention to mediate the fall out.
How is this story still relevant today? The process played out within an almost comical 'tulip mania' has been repeated in far more devastating contexts recently. The 2008 financial crisis had much of the same steps within the housing market. Financial repackaging of mortgage debt belonging to individuals with a high risk of being unable to make payments continued to get low risk ratings, increasing the market and popularity of this debt in packages called Collateralised Debt Obligations(read grouped debt). A combination of selling mortgages to risky individuals, selling debt using deceptive ratings, and the maintenance of persistently low interest rates led to a housing crash when numerous households defaulted (couldn't pay) on their mortgage payments, causing panic at a more grassroots level, as well as within a banking system which had been trading risky debt.
More recently, the rise in bitcoin has been described as a speculative bubble, with rapid increase in prices accompanying media get rich quick anecdotes of 'bitcoin millionaires' fuelling speculative buying.
The difficulty within speculative bubbles is predicting when they will burst, and when to get your money out, before it's too late.

Organ Donation and Nudging

What’s a decision? "A determination arrived at after consideration", emphasis on consideration. We think of ourselves as decision-makers, free human beings, and yet, in our daily lives, many of the decisions we make are by default rather than involving actual consideration. We use heuristics and biases to make many of our day-to-day decisions, but these biases could be a matter of life or death.

(dramatic pause)

Depending on where you live, your opinion towards organ donation could be skewed in two ways: it’s ethically meaningful and a very serious decision or it’s the most normal thing in the world. This is the public opinion on organ donation in Germany and Austria (respectively), neighboring countries with a shared history and culture.  The difference here is between two different policies, Germany has an opt-in policy for organ donation whereas Austria has an opt-out policy; in Germany, you have to actively register for organ donation (just like in the UK), in Austria you are registered by default. These different policies have dramatic effects. In Germany around 12% of the population is registered as an organ donor, in Austria, it ’s close to 100%. In Germany, organizations have desperately tried to increase the number of organ donations in the past few years, with costly print campaigns and posters (we have not yet reached the 21st century) where “celebrities” self-identify as donors and try to convince you to make a decision and fill out a pass. This didn’t seem to have an effect, on the contrary, the number of registered organ donors in Germany has been falling over years has been falling over the years.
Biases affect our lives in significant ways. The bias most likely at play, in this case, is the status-quo bias; we prefer things to stay the same. We subconsciously expect the default to be there for a reason and to communicate some kind of information about the “right” decision. The government chooses the default in most cases which pushes (or in the fancy behavioral economics term, they “nudge”) us in one or the other direction. This is why countries can’t just simply move from opt-in to opt-out. In Germany, proposers of the opt-out policy have seen a significant backlash, because the status quo is opt-in. People consider the policy in place to already be the right one.

Defaults specifically, and nudges more generally, set out a framework in which we make our decisions, which is why it’s pertinent governments catch up in understanding human behavior. Nudges as a policy tool have been objected for manipulating citizens and implying that “government knows best” (or at least better than we do ourselves), but sometimes it does. The mental shortcuts we take in our day to day lives don’t always lead us to a beneficial outcome for society, or ourselves, for that matter.  We should save for retirement, but we don’t; we should eat healthily, but we don’t; we should be environmentally conscious and use fewer plastic bags, but some of us don’t. By understanding how and why we behave the way we do can help government gently lead us to improved decisions. All this, while still keeping other options open. This is what Richard Thaler (who won a Nobel Prize in economics) and Cass Sunstein (who worked in the Obama administration) call libertarian paternalism; the government suggests an option (paternalism) but we are not restricted in our choices, we can always decide to go the other way (libertarian).

Quick side note on the word paternalism. It means someone’s interfering and restricting choices, implying that the interferer knows better what is right. Notice anything about that word?
If your answer was, “Of course I notice that this word is gendered, Marie”, then 100 points to you.
“Pater” means father in Latin. The background of the political use of the term paternalism stems from the idea that the state should mirror the image of the family, with (of course) the father being the head of the family. I’m not criticizing Thaler and Sunstein for using a word that has been around for ages, just pointing to the fact that our language is gendered, but let’s get back to nudges.

While the idea of government manipulating people in whatever way they like (think Aldous Huxley’s Brave New World) does sound scary, nudges this far usually work on a smaller scale, which also makes them relatively cheap. Most policy examples are small tweaks to existing policies to make them more effective.
Nudge theory in policy making is just getting started, but in terms of manipulation, businesses are way ahead. The product design, advertising and make-up of Mc Donald’s restaurants, for example, are all far from arbitrary, instead, they are carefully designed to get people to buy as much as possible to maximize the firms’ profits. Given this, it is important that governments become at least aware of the possibilities behavioral sciences and subconscious cues open up. The UK already famously established their nudge unit (behavioral insights team) and Australia has something similar

The UK, it seems, has found a way to deal with the organ donor situation. The government will try to switch from opt-in to opt-out and aims to have changed the policy by 2020. Apparently, the most important part was shifting public opinion, and starting a discourse to get people involved will hopefully make people willing to diverge from the status quo.


Side note: I’d be interested in seeing gender differences in organ donor registration. The only studies I found were that women where donor more often than men, whereas men received organs more often (I think the study was concerning kidneys).