One Class of Software that Piracy Can't Kill

Most software is meeting the same unfortunate fate as music (at least from the perspective of those who are paid to produce it).

Software can be easily copied, and piracy runs rampant in many major developing markets, such as China. Even for legal uses, as discussed in Chris Anderson's "Free," the cost of transmitting bits instead of atoms is near zero. Sooner or later, the price of digital information has to plummet accordingly.

However, some software companies can make substantial profits from their programs aside from charging for each copy. The most obvious is advertising, which supports many Web games. Additionally, consider a program like SAS, which is used to perform complicated data manipulation and statistical analysis.

Even today, SAS has a large base of paying customers for its software. But even if the program were widely pirated, SAS differs from other software in an important way: it's complicated and difficult to learn, but once mastered, it has incredible potential. So SAS can profit by holding training sessions throughout the country and online.

Of course, a software company cannot be a monopolist on support for its product. While it's illegal to copy and independently distribute SAS's training material, it's not illegal to sell original guidance about how to use SAS. Rival SAS reference books exist, and even SAS instructors will tell you that one of the best sources for help comes free: Google. So while people may be willing to pay a slight premium for guides published by the SAS company itself, SAS cannot charge exorbitant prices for its training sessions or materials.

Even if the licensing and training profit centers eventually dry up, SAS still has one more avenue for profit. When a company is trying to hire a statistical programmer to run SAS, it's going to have a hard time ranking the skills of hundreds of applicants. Analysts can pay SAS to take a certification test, and a passing score serves as a credible signal of programming ability. It's possible to imagine a rival certification program forming to undercut SAS's test proctoring fees, but it's doubtful that companies that hire SAS programmers would put much faith in a startup certifier when SAS's certification is already familiar and predictable. Job applicants would be willing to pay a premium to earn SAS's certification if it means putting them in the running for a higher-paying job.

Maybe Apple Should Share Its iPhone Plans?

There's been renewed speculation that a new version of the iPhone is coming out this summer and possibly a Verizon version as early as September (Verizon's network uses a different protocol than AT&T's does, so making a Verizon-compatible version is no small feat).

Successive generations of cellphones are strong substitutes for one another. It's understandable why manufacturers don't announce new models very far in advance, as they immediately cannibalize sales of the current model in the interim.

But Apple seems to be in a unique situation. Its iPhone is tied to AT&T's network, which iPhone users have been complaining about for years and which has been cited as the No. 1 reason not to get an iPhone. For customers already with Verizon, it takes an awful lot to switch networks (especially if you're under Mom and Dad's plan or if you're locking into a contract), so many of them are buying other smartphones instead. I would think that an official announcement of an imminent Verizon iPhone would be enough to persuade many prospective Verizon smartphone buyers to wait a few months, and that Apple would make more money in the end from such a move.

Then again, maybe Apple isn't making promises far ahead of time for fear of not delivering. Or for fear of giving Verizon too much negotiating leverage.

The Hot Girl Resource Curse

Economists have long speculated about the existence of resource curses. For instance, a nation rich in a finite resource such as oil might rely too heavily on it and fail to develop other areas of its economy.

What about a hot girl resource curse? On average, we would expect hot girls to have an easier time at life while they're young. If you constantly have guys fawning over you, it's hard to make yourself buckle down and learn Chaucer or calculus. These girls have less of an incentive to study or invest in other areas of themselves, as they can go through their young lives with stuff being handed to them.

But just as Arab countries may eventually run out of oil, the hot girl's main resource--her looks--is also finite. Once her beauty fades, she may regret not having invested in other areas of herself earlier in her life.

If You're Really Human, Type "Antlers"

I recently wrote an e-mail to a marginally famous person, and I got back the following response:

Your mail to me (reproduced below) was not delivered because you are not on my "whitelist" of approved senders.

To add yourself to my whitelist, please resend your mail with the word "antlers" anywhere in the subject line.

If you do this once, you will be added permanently to the whitelist and you'll never have to do it again.

I'm sorry for the minor inconvenience, but this is the only effective way to stop spam.

This seems like a reasonable request, but it got me to wondering why we don't see this more often.

All forms of spam I can think of can be described this way: A group of transmitters is trying to send information to a recipient. Many of the transmissions come from legitimate sources, but others are sent automatically by spammers.

The onus to deal with spam doesn't always fall to the same side of the transaction. Transmitters bear the burden for things such as buying concert tickets. Ticket buyers are asked to solve a CAPTCHA, or a garbled word image that is difficult for computers to understand, to ensure that spammers don't buy up all of the tickets. To somewhat offset the pain, many sites use reCAPTCHA, which helps digitize books when users solve CAPTCHAs.

Conversely, the task of dealing with e-mail spam usually falls to the recipient. Many mail clients have spam filters built in, but they aren't perfect. Spam dupes some users into downloading viruses or giving away sensitive personal information, and pretty much everyone is annoyed by spam to some degree.

So why isn't the "send me a message with antlers in the title" approach more common?

E-mail spam filtering has to make a tradeoff between two types of errors: marking spam as legitimate e-mail, and marking legitimate e-mail as spam. For most people, the latter is worse than the former. For instance, I'd happily delete 10 mislabeled spam messages instead of losing one legitimate message.

The "antlers" approach will often fail. Some people won't follow the instructions correctly, so their messages will never get through. Additionally, sometimes users get important e-mail from automated sources, which won't be able to understand and comply with the "antlers" request. For instance, Amazon sends me messages when there's problems with my order. I've also received automated messages from potential employers telling me I need to fill out a form online or I will no longer be considered for the position.

In short, dealing with spam as a recipient is annoying, but it's worth the effort to avoid missing important messages. And the annoyance wouldn't stop if the system were reversed; we'd just to have solve "antlers" problems whenever we sent an e-mail to someone new.

Kill Yourself to Donate Your Organs and Save 5 People?

I've been wondering about a version of the transplant problem thought experiment for years. The way I've always formulated it was this:

Right now, I could volunteer to donate all of my organs, saving at least a handful of lives at the cost of my one life. Five people (or so) get to live, while only one person (me) has to die.

Am I really that selfish to value my own life so much more highly than those of other people, even if they are strangers? I can think of two "economics"-type solutions to this dilemma, but I can't say I buy into either fully.

First, some might argue, sacrificing myself for organs at age 23 isn't optimal. The world would be better off if I live a long time, experience all sorts of utility for myself, and then donate my organs after I die.

I could be wrong, but I think I could save more people donating now, when I'm healthy, than I could by waiting until I die. At that point, I don't need my organs anymore, so the donation is essentially costless, but I would expect that my organs would be in rather bad shape and thus much less useful. Yet I choose not to donate early. (Anyone with a firmer grasp of biology who sees a flaw in this argument can feel free to point it out in the comments.)

Second, one could argue that you can save more lives by living than you can by killing yourself and sacrificing your organs. If you devote your life to some sort of charitable or missionary work, it's easy to imagine scenarios in which this is true.

This is much more of a stretch, but one could also argue that pursuing your goals is better than sacrificing yourself, no matter what your pursuit. Technology and economic progress have allowed billions of people to enjoy so much wealth and pleasure in ways that wouldn't be possible if people were sacrificing themselves all the time. Such societal progress requires expertise and mastery in countless fields, perhaps including the one you want to work in.

Steven Landsburg's book is again the source of inspiration for this post. The transplant problem is, incidentally, a variation of the more widely known trolley problem. The problems typically involve a third party: If you're a surgeon, would you harvest someone else's organs to save five people who otherwise are going to die within the hour? Would you push a fat man in front of an out-of-control train to save five people tied to the track? However, I've always thought of them in the first person: Would I be willing to sacrifice myself to save others?

(Note to relatives and close friends: I'm very happy with life and not at all on suicide watch. It's just a thought experiment!)

Good Enough for Stanford Is Good Enough for Us

University of Rochester economist Steven Landsburg's "The Big Questions" has a fascinating discussion about how we value our own opinions above those of people who are just as smart, capable, and well-informed as we are. This stubborness often leads us to needlessly duplicate the work of others, such as in evaluating job applicants:

[George Mason University economist Robin] Hanson's best guess is that disagreements persist because we tend to overestimate our own intelligence, and therefore tend to put too much weight on our own opinions. One sees this in academic circles all the time. Every year, the members of my department devote prodigious amounts of energy--perhaps half our working hours over a period of several months--to evaluating the qualifications of applicants for faculty positions. At the same time, the faculties of MIT and Stanford are evaluating pretty much the same pool of candidates. Yet we persist in making offers to candidates we believe are strongest, as opposed to the candidates our Stanford colleagues believe are strongest--even though they're surely as well qualified to make judgments as we are. We could save ourselves a lot of time and effort by just announcing a policy that we're willing to hire anyone with an offer from Stanford.

An offer from Stanford is a very credible signal of quality. So credible, in fact, that the University of Rochester could use it as a substitute for its own expensive and time-consuming applicant screening process.

Taking this idea one step further, if such a practice were the norm, all the universities would want some place like Stanford to do all the legwork of screening applicants, while the rest of the universities could pick up the people who decline Stanford's offer.

Of course, Stanford isn't going to make enough offers to support the rest of the system (and it might even begin to make offers strategically to hurt the copy cats). And many, if not most, people with such an offer would accept it. Even expanding the criteria to "we'll hire anyone with an offer from an Ivy League school" or something similar wouldn't cut it, either.

But I could imagine a world in which some centralized body interviews and evaluates all the candidates. Universities would then be willing to hire an applicant if he has a sufficiently high score.

Then again, such mass evaluation has proven imperfect in the past. High school students with the best SAT scores or GPAs don't always become the best college students (though there is enough correlation that these measures still have value). Law students with the best grades or scores on the bar exam aren't always the best lawyers. But does the econ department at Rochester make better hires under the current system, which brings in face-to-face contact and subjective evaluation, than it would if it just based hires on scores? More importantly, even if the current system picks applicants slightly better, is it worth the huge amount of effort the system requires?

Maybe the differences between universities and departments are more important than Landsburg lets on. Perhaps the perfect candidate for Stanford is a poor fit for Rochester, if the programs have different focuses. Also, it would be difficult to assign objective scores to rate the quality of professors in the arts and similar disciplines.

The Use of Your Likeness at Sporting Events

All professional sports teams, as far as I know, include language on the back of their tickets mirroring this policy from the San Diego Padres:

This ticket grants MLB, National League, Padres and anyone authorized by the Padres irrevocable permission to use the holder's voice, image or likeness for any live or recorded video display, broadcast or other transmission, reproduction or other depiction in any media now or hereafter existing for any legal purpose without the consent of the holder.

In other words, by showing up at the game, you agree that your image may be published in newspapers, posters, and team promotional materials. You might be shown on TV attending the game, even if you told your boss you were sick that day. Your heckling may be heard on the radio broadcast, even if you've had too much to drink.

It's nearly impossible to photograph the game's action without capturing fans in the background. Clearly, requiring the team to get waivers signed for every picture is untenable. A single unaccounted-for person or holdout could stonewall a photo's publication. Teams and fans are both better off when everyone's likeness can be published at will, as it saves considerable expense and headache.

While the chances of any particular fan being photographed are small, being in the wrong place at the wrong time can have long-lasting consequences. You could end up like Steve Bartman, who can't do anything to prevent people from circulating the infamous photo of him arguably interfering with a foul pop-up in the 2003 NLCS, perhaps costing the Cubs a chance at the World Series. Or you could be like Helen Gawn, the nun who caught Bobby Thompson's "Shot Heard 'Round the World" in 1951 when she wasn't supposed to be at the game and who spent the rest of her life making sure no one found out (as amazingly recounted in the book "Miracle Ball").