Communicating Quantitative Information

1. Communicating Quantitative Information Comments on papers Inflation corrected dollars Carbon tax Superintendent's payout Insurance. Time value of money. Return on investment Homework: Postings. Next class in computer classroom: NS1013

2. 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

3. 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

4. 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!

5. 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)

6. Abstract • Professional, formal document • Avoid: I am going to talk about …. • Summary • Generally this will not include all the points in your presentation!

7. 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

8. 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

9. 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

10. Overperformance (in terms of polls) vs Contact rate advantage

11. 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?

12. 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

13. 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)

14. 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

15. 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. • ?

16. Now • Technically, recession is over. • Talk of 'double dip', 'slipping back into recession', 'jobless' recovery.

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

18. 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

19. Personal back of the envelope calculation 1978 • We bought a house in Mt. Kisco: $70,000 • My starting salary at IBM Research was $25,000 2006? • My house: maybe $700,000??? • Typical starting salary $100,000??? So: housing up ???Salary up ???

20. 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

21. 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

22. 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?

23. 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.

24. Ethanol issue • Extra credit posting opportunity • Compare corn ethanol and other ethanols with respect to • Costs • Carbon costs • In making • In using

25. 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)

26. Story: Big payout • … to retiring superintendent Bedford Central Schools: Bruce Dennis • $700,000 • Details • Insurance policy • District pays premiums • Unused sick days • other

27. 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.)

28. 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.

29. 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)

30. 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

31. Compounding: p for principal, r for interest rate, n for time periodsp * (1 + r)n

32. 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 x x * (1+r)n = g x = g / (1+r)n • Monthly saving • use pmt formula

33. Return on investment: ROI • One of several ways to evaluate projects ROI = (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)

34. 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.

35. Alternativestrategies: made up $$$ MADE UP NUMBERS • 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?

36. 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 ?

37. 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)

38. 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

39. Homework • Postings • Start thinking about Project II topic • Consider making presentation this time if you didn't before.