Communicating Quantitative Information

Comments on papersInflation corrected dollars

Carbon taxSuperintendent's payout

Insurance. Time value of money. Return on investment

Homework: Postings. Next class in computer classroom: NS1013

General comments on presentations• Presentations, especially short ones, are difficult, but

worth practicing.• Enthusiasm—your own interest in the topic—is critical to

success.• Asking questions to the audience is an excellent

technique.• Focus on major issues: major on the majors.• What are the definitions? What is/are the

denominator(s)? What is the difference?– Context: categorical, historical, geographic, ???

• DID NOT APPLY LAST WEEK: Belt and suspenders– Be prepared for problems with equipment– Only apologize once

More…• Don't read the charts• Consider more pictures/diagrams and fewer words

but– If putting in words helps you, do it– Some words are important:

• Definition• Quote• ??

• Consider using PowerPoint notes and printing them out

• Consider (carefully) handouts– Before– After

General feedback: Papers• Proofread: re-read the paper yourself AND use spell-

check and grammar check– Its vs It's. Too vs. To vs. Two. Their vs. There vs. They're.– GRAMMAR.

• What are uses of a semi-colon? Colon?• Make sure most if not all of your sentences are sentences.

• [Invest in a staple]• Use header/footer to put in name, title, page number• Use bold, italics, other• Make sure charts are clear. If they required color and

you don't print in color, make sure reader can understand!

Feedback, cont.

• Study the graphs and make sure you understand terms, relationships, percentages, denominators, context, etc.

• List / describe / enumerate facts AND make/draw your conclusions– Don't bury the lead…. State conclusion and then back

it up.

• Avoid overly emotional, judgmental language• Avoid weak terms: interesting, some say, more

(without making it clear, more than what)

Abstract

• Professional, formal document

• Avoid: I am going to talk about ….

• Summary– Generally this will not include all the points in

your presentation!

Sources and citations

• Multiple sources

• Evaluate quality.

• Use standard formatting– Name author, owner, publisher, organization– Date published. For website, ALSO include

date viewed.– Use bold and italics.

• Personal experience can be cited

General comment

• You want [your reader(s)] to believe that you have spent more time working on the paper than I/we, the readers, do reading it.– Teachers say

• for the students, it was a 'write only file'. • I was the first (and only) reader of the paper.

• Following directions is important– There are times to rebel, but following

directions on what is a 1-pager is not one of the

Next chart

• Want to see relationship between two things

• Issue in example is contact rate of ground game in 2008 election versus how well candidate did.

• Make a graph. Each point• X value: difference between contact rate• Y value: over/underperformance

Overperformance (in terms of polls) vs Contact rate advantage

Correlations

• … don't prove causality but• It does seem reasonable to say that good or

great ground games are worth something.• OR maybe youth and minorities required more?• NOTE: not clear when contact(s) were. Some

contacts may have been before polling.– I was calling Colorado Tuesday evening in 2008– I / we made many calls last week…

• not enough or would things have been worse?

Youth vote (18 to 29)

• It appears that youth turnout was greater than previously– Continues trend of increase in 2004

• Youth vote went heavily Democratic in 2008– 68 to 30

• Extra credit opportunity (or Project II): Youth vote in 2010 midterms:– What is youth vote as percentage of youth eligible?

• Compare to past and compare to total.– What is youth vote as percentage of all voters?

• Compare that percentage to percentage of youth?– What about new voters?– Youth vote fall off from 2008 versus all vote fall off – Your own experience

Jobs

• Latest jobs report http://www.nytimes.com/2010/11/06/business/economy/06jobs.html?hp

• Jobless rate versus number of jobs not always linked– Country needs more jobs to be created

because there are more people wanting jobs (not absorbed by retirees)

Business cycle

• Growth, • Boom times, • Businesses expand and produce more goods

and services, • at some point, too much, markets shrink• Contraction

– Severe retraction called recession…

• Recovery, Growth, boom times

Recession

• A recession is when my neighbor is out of work. A depression is when I'm out of work.

• Recession is when Gross Domestic Product (goods and services) shrink for 2 straight quarters (Jan-Mar, Apr-June, etc.)

• Recession is when an official government agency says there is a recession.

• ?

Now

• Technically, recession is over.

• Talk of 'double dip', 'slipping back into recession', 'jobless' recovery.

Predictions

• As Nobel Prize-winning economist Paul Samuelson once quipped, “Economists have correctly predicted nine of the last five recessions.

Money values over time• Generally, there is inflation…

– Costs go up meaning value of money goes down though…

– Costs do not ALL change uniformly so statements "Inflation is x%" is estimate

• consumer price index (cpi) is specific calculation: Extra Credit Opportunity

• So… how to compare money figures over time• [You want to do comparisons.]

– One approach to convert to a standard amount• Convert to old year (historic standard)• Convert to today

– Compare prices of two items or the one item with everything else

• Remember dental care

Personal back of the envelope calculation

1978• We bought a house in Mt. Kisco: $70,000• My starting salary at IBM Research was $25,0002006?• My house: maybe $700,000???• Typical starting salary $100,000??? So:

housing up ???Salary up ???

The Carbon calculus

• http://www.nytimes.com/2007/11/07/business/businessspecial3/07carbon.html?hp

• Carbon dioxide is produced by burning (using) what are termed fossil fuels: oil, natural gas, coal as well as other things.

• Carbon dioxide is an externality: something that produces costs for other people than the producer– Immediate pollution– Long term global warming

• Strategy: impose taxes on the use• This would change the relative costs of different types of

fuel

Compare

• Taxes are used for other policies– 'sin' taxes, for example, cigarettes

• proposal in NYC for tax on soda

– Fewer / less taxes on food– Tax deduction for mortgage interest– Fees for use of parks– Tolls

• Congestion prices: fees to lower traffic

Subsidies?

• Some highway costs can be viewed as being paid by taxes on gasoline….

• …However, roadways, interstate highway system built and maintained for the general good– Information Super Highway idea: funding of research

and development of Internet based on same idea

• Clean up after oil spills, other disasters are paid (mostly??) by general tax revenues– Is this subsidy for oil business?

Cap and trade

• Alternative strategy to straight tax

• Allocation = 'cap' on companies

• Companies can trade/buy unused allocation from other companies

• Good topic for postings

• Good topic for project II.

Ethanol issue

• Extra credit posting opportunity

• Compare corn ethanol and other ethanols with respect to– Costs– Carbon costs

• In making• In using

Old news

• Mt. Kisco Library bond referendum Nov, 2005– Village takes out a loan– Cost of paying back loan falls on property owners– Considered appropriate for long-term CAPITAL expenditures

such as library buildings• NOT appropriate for shorter term, operational expenses

– Cost given (by newspapers) in terms of assessments• [News story numbers were accurate; these are not.] House with

average assessment of $33,000 would pay $180 each year.• PROBLEM: assessments are way below market value AND there

are two assessment systems. Many people calculated that they would be paying thousands of dollars more.

• BUT…bond issue resolution was passed.

• Library building built!– Re-design (smaller)

Story: Big payout

• … to retiring superintendent Bedford Central Schools: Bruce Dennis– $700,000

• Details– Insurance policy

• District pays premiums

– Unused sick days– other

Truth

• Net: District did not pay Dennis $700,000 but [only] what was part of contract.

• Many employment plans include built-in life insurance

• Policy would re-pay the District out of the benefit.

• (Dennis was well-paid.)

On-going issue

• Pensions often paid using formula based on last year's pay

• In some situations, overtime goes into the calculation.

• May be issue in state and local government.

• Pension costs uncovered part of many state and local budgets.

Insurance

• Companies– understand probabilities on events happening

• Life Insurance: mortality rates

– make money• take in premiums• invest money

– make money on this money

• pay-out when required– need to keep customers satisfied

– government regulation

– some policies never pay out (beneficiaries do not make claims)

Insurance

• Life insurance policies may include as part of the product– insurance– annuities: some of premium is 'equity', invested, and

has a cash value• 'cash in' life insurance. Tends to be less than expected.

• Term insurance– all insurance. No residual value

• Notion of 'self-insurance'– in place of buying life insurance, save/invest the

money

Compounding: p for principal, r for interest rate, n for time periods

p * (1 + r)n

Principal 1000Interest 0.04

0 1 2 3 4 5 6 7 8 9 101000 1040 1081.6 1124.864 1169.859 1216.653 1265.319 1315.932 1368.569 1423.312 1480.244

Time value of money• Work opposite direction

from compounding• If you want to have g,

what do you need to invest, assuming rate of growth r (r may not be guaranteed) Call what you need to invest

xx * (1+r)n = g

x = g / (1+r)n

• Monthly saving– use pmt formula

Goal 10,000.00$ Interest 4%Years 10

1 time investment, annual growth 6,755.64$ 1 time investment, monthly growth 6,707.66$

Monthly savings $101.25

Return on investment: ROI

• One of several ways to evaluate projectsROI =

(Estimated lifetime benefits-Est. lifetime costs)/(Est. lifetime costs)

Costs = development costs + operating costs

All costs and benefits time-adjusted

Annual ROI = ROI/(lifetime in years)

Health Insurance

• Pay premiums OR (more typical) employer pays premium/fees

• HMO negotiates with providers. May pay providers per person for basic care/costs

• Person incurs expenses.– may have annual deductible– may pay co-pay per visit

• WHY? To control costs

– HMO may need to approve service. May consider part of basic care. May pay less than billed.

Alternative strategies: made up $$$

• Choose:– pay $2000/year to HMO for regular coverage: $200

annual deductible– $200 expenses, you will have paid $2200– $500 expenses, you will have paid $2200– $1200 expenses, you will have paid $2200

– pay $1000/year to HMO for high deductible policy (catastrophic coverage). (Put $1000 in the bank). $1200 annual deductible

– $200 expenses, you will have paid $1200– $500 expenses, you will have paid $1500– $1200 expenses, you will have paid $2200

» Do you have the (additional) $200?– $2000 expenses, you will have paid $2200

» Do you have the (additional) $200?

MADE UP NUMBERS

Your turn

• pay $1000/year to HMO for high deductible policy (catastrophic coverage). (Put $800 in the bank). $1000 annual deductible

• $200 expenses, you will have paid ?• $500 expenses, you will have paid ?• $1200 expenses, you will have paid ?• $2000 expenses, you will have paid ?

Comment• Paperwork can be a problem, but…• Easy to over-react.• Gate keeper and co-pays have role to prevent

overuse and mis-use.– Direct to consumer ads may promote mis-use.

Comment?

• Do we individually and collectively have ‘appropriate’, ‘good’, ‘best’ health care?

• Need to understand economics (numbers) to address these issues.– Project II topic(s)

Comment• Health care bill: many parts

– exchanges for buying insurance with certain guarantees• Plan (expectation) for lowering costs:

– less emergency room and other hospitalizations– monitor care such as re-hospitalizations– reduce subsidies for Medicare advantage plans– negotiated decrease in costs for drugs for seniors– ?

• Increase costs (by government)– tax breaks for small business– subsidies for people to get insurance– administration– ?

• Everyone required to buy insurance or pay fees• Expectation: health costs go up, but not as fast.• Potential / future

– movement to pay for care as opposed to pay for procedure

Homework

• Postings

• Start thinking about Project II topic– Consider making presentation this time if you

didn't before.