May 29th Links

• If you observe, people always live for ever when there is an annuity to be paid them; and she is very stout and healthy, and hardly forty. An annuity is a very serious business; it comes over and over every year, and there is no getting rid of it. You are not aware of what you are doing. I have known a great deal of the trouble of annuities; for my mother was clogged with the payment of three to old superannuated servants by my father's will, and it is amazing how disagreeable she found it. Twice every year these annuities were to be paid; and then there was the trouble of getting it to them; and then one of them was said to have died, and afterwards it turned out to be no such thing. My mother was quite sick of it. Her income was not her own, she said, with such perpetual claims on it; and it was the more unkind in my father, because, otherwise, the money would have been entirely at my mother's disposal, without any restriction whatever. It has given me such an abhorrence of annuities, that I am sure I would not pin myself down to the payment of one for all the world. [Jane Austen]
• The difference between "select" and "ultimate" mortality rates is apparent when someone applies for life insurance, the company has an opportunity to check the prospective policyholder's health. This medical selection process screens out unhealthy applicants, so the accepted applicants have a lower chance of dying in subsequent years. This effect gradually wears off over 15 to 25 years. By re-applying for life insurance, a policyholder can put themselves in a new pool of healthy insureds, and the cost of your coverage will reflect the difference between select (i.e., related to insureds whose healthy has recently been checked) and ultimate (i.e., not recently checked) mortality rates. This savings will be partially offset by new acquisition costs, including selling expenses (commissions and other costs), underwriting and administrative costs, and state premium tax. [link]
• We turn next to discuss how insured individuals' mortality compares to mortality of the general population in the US and the UK for select and ultimate insurance tables, and in Japan only for the ultimate life insurance table. On average, the general population dies earlier than people who take out whole life insurance. The modal age at death in the general population is lower than the modal age at death of insured males in the UK. This is in spite of the fact that incentives in purchasing life insurance would be expected to encourage people to buy who believe that they are more likely than average to die sooner. [link]
• As discussed, although the periodic premium payments exceed death benefits and other expenses for an insured group during the early years of the policy, they fall short during later years; consequently, the insurer accumulates a reserve to offset this deficiency. The insurer's reserve is similar in amount, but not identical, to the sum of cash values for the insured group. The reserve is a liability on the insurer's balance sheet, representing the insurer's obligation and reflecting the extent to which future premiums and the insurer's assumed investment income will not be sufficient to cover the present value of future claims on a policy. At any point, the present value of the reserve fund, future investment earnings, and future premiums are sufficient to pay the present value of all future death claims for a group of insureds. [link]
• Thousand Oaks has all the symbolism of farm life, minus the productive agriculture and supportive community. And driving everywhere, every day, for everything is mandatory. The residents may not know it, but they're all just as dependent on the "Nanny State," multinational corporations, global financial institutions, and just-in-time delivery systems as people living in high rise towers. [Granola Shotgun]
• Give an American kid a math problem, and chances are they'll squirm, whine, complain and hit you with that tired refrain: "When am I ever going to use this in the real world?" Answering that question directly is a mistake. When are you going to need to factor a polynomial in the "real world"? Maybe never, kid. Especially not with that attitude. [link]
• A friend of mine uses AWS to rent IP addresses to reset his article meter on popular news pages, allowing him to download web pages through a Singapore data center using a custom command line utility. Engineers who make hundreds of thousands of dollars are suddenly tantalized by the challenge of trying to break through a porous paywall. I have less technical friends Googling URLs, setting up proxies, and other tactics to get to the same outcome. [link]
• Netflix keeps spending more cash than it generates from operating its business. The company burned $2B in cash in 2017 (up from $1.7B a year earlier), and expects that figure to grow to $3–4B in 2018. What's more, Netflix CEO Reed Hastings has promised that negative free cash flow will continue for "many years" and the company continues to accumulate debt (raising annual interest expenses) and content liabilities (increasing the amount it'll need to pay suppliers over time). However, this cash loss only exists because Netflix is funding next year's content against this year's revenue. Netflix could have chosen to stabilize its 2018 content offering at 2017 levels (i.e. not ramp up spending), and its actual cash spent would have been just $6.2B (roughly equivalent to its content amortization) – a "savings" on the books of $2.7B. And had the company done this, it would would have generated $700MM in cash, not lost $2B. [link]
• When engagement (i.e. hours) is the top priority, incentives change. Quality is only one of many important variables – and probably not the top one. Is it better for 125 people to watch a six-episode season of Jessica Jones that's of 'A-' quality, for example, or for 100 to watch a 12-episode version that's dragged down to a 'B'? After seven Marvel series, Netflix's answer seems to be the latter. [link]
• Coffee-houses work great in a high trust society, yes you have someone conducting their business during the day on one cup of coffee, but with some gentle reminders he makes way for the family coming in, or he brings in his business associates next time and they all order lunch and it all works out somehow. If everyone is basically at war all the time with people in the wrong cultural/ ethnic group this can never work. If you have a store at all you sell your items from behind bullet proof glass, silently. And not incidentally, one clue that the USA is now a low trust society is that you rarely see customers talk to each other in a Starbucks. In past centuries, coffee houses is where you went for conversation (you went to taverns to hook up with prostitutes). [Sailer]
• "Sixteen weeks into ownership, we've had so many issues with our Model 3 that we started a shared Google Doc to catalog various warning messages, necessary screen resets and general failures," they wrote in the most recent long-term update. Indeed, the number of issues Edmunds has had, especially in regards to the touchscreen and audio system, is shockingly atypical for a new car. They also observed a potentially dangerous problem with Autopilot that ultimately led to Tesla issuing a successful software update. [link]
• Tesla's Model 3 represents the electric automaker's first attempt at a more affordable mass-market car. In Consumer Reports' tests, we found plenty to like about the luxury compact sedan (which starts at $35,000 but goes all the way up to $78,000), including record-setting range as well as exhilarating acceleration and handling that could make it a healthy competitor to performance-oriented cars such as BMW's 3 Series and the Audi A4. Our testers also found flaws—big flaws—such as long stopping distances in our emergency braking test and difficult-to-use controls. [Consumer Reports]
• A man has 1000 times as many cells as a mouse... and we usually live at least 30 times as long as mice. Exposure of two similar organisms to risk of carcinoma, one for 30 times as long as the other, would give perhaps 304 or 306 (i.e., a million or a billion) times the risk of carcinoma induction per epithelial cell. However, it seems that, in the wild, the probabilities of carcinoma induction in mice and in men are not vastly different. Are our stem cells really, then, a billion or a trillion times more "cancerproof" than murine stem cells? This is biologically pretty implausible; if human DNA is no more resistant to mutagenesis in vitro than mouse DNA, why don't we all die of multiple carcinomas at an early age? [Wiki]
• The students flying these world's-most-advanced training aircraft are currently "unemployed." In other words, they are young Americans who can't get organized, in one of the tightest labor markets in U.S. history, to walk down to McDonald's at 3 pm and start an evening shift. The California officials, however, have decided to train them for a job that requires getting up at 4:30 am. [Phil G]
• Pilots who transitioned to the Predator from traditional aircraft did better than pilots for whom flying was purely a desk job. The drone-only pilots would put in huge rapid power changes at high altitude, rather than making the smooth throttle adjustments of an experienced turbocharged piston pilot, and the result would be cracking, oil loss, and a $4 million hole in the ground. [Phil G]
• Like bowhead whales, elephants are large, long-living animals that seem to resist the development of cancer. The cancer mortality among captive elephants (4.8%) is lower than that of humans (11 – 25%). This increased resistance could involve changes in tumour-suppressor capacity. Abegglen et al. (2015) showed that elephants have 40 TP53 alleles (humans have only two), leading to enhanced TP53-mediated apoptosis. This gene is associated with the evolution of increased body size and enhanced response to DNA damage in elephants. Elephants are one of the few animals whose reproductive fitness increases with age, which may have selected for their effective cancer-suppression mechanisms. [pdf]
• One seasoned and cynical executive defined mortgage banking as "the systematic transfer of loan revenue and shareholder capital from shareholders to loan officers [sales reps], who bear no risk with respect to repurchase, prepayment, or regulatory actions." [Patio11]
• In every era and every political dispensation, businessmen ask themselves: What am I required to do to make money unmolested by the government? [NY Times]
• What's striking, however, is that what counts as "progressive" here almost never crosses class lines. Not once have I heard a discussion of unions while in business school. The minimum wage isn't a hot topic either. [New Republic]
• Is this a middle-class anti-welfare rebellion in disguise? Instead of the expected revolt against paying higher taxes to fund more lavish welfare, though, what we’re seeing is middle-class Americans saying "I also want to be on welfare?" [Phil G]
• A limnic eruption, also referred to as a lake overturn, is a rare type of natural disaster in which dissolved carbon dioxide suddenly erupts from deep lake waters, forming a gas cloud that can suffocate wildlife, livestock, and humans. Such an eruption may also cause tsunamis in the lake as the rising CO2 displaces water. Scientists believe earthquakes, volcanic activity, or explosions can be a trigger for such a phenomenon. Lakes in which such activity occurs may be known as limnically active lakes or exploding lakes. [Wiki]