8 ms·

The Access Economy: Why the Normal Distribution Is Vanishing (2015)

222 points by ranvir 7y ago

polote 7y ago
> Chances are good that if you’re in the market for a smartphone, you fall into one of two very clear cut categories. Either: a. you’ve decided that your new phone is a very important item in your life, so you’re going to buy the nicest phone available at whatever price. (Usually this means an iPhone, although some flagship Android phones qualify for this category.) Or, b. you’ve decided that just about every phone out there is ‘good enough’ and is more than adequate for your needs, so you’ll go with whatever one costs $0 with your existing wireless contract. He doesn't provide any figure, he just says things and consider them to be true.
- bko 7y ago
  I don't think it is true. Just a cursory google search suggests that the market, at least globally, is a lot flatter and is likely flattening. Not everyone has an iPhone or Samsung. [0] Similarly, those large cities he lists (LA, New York and San Fran) have relatively low population growth, at 0.67%, 0.25% and 1% respectively [1]. Large cities like Phoenix, and Austin have around 2% growth. This makes more sense to me. As these cities become crowded and expensive, people will naturally look for a better deal. These types of articles are just lazy. The author doesn't even seem to bother doing basic research. [0] http://zindagi.online/2018/12/03/gartner-global-smartphone-shipments-grew-1-4-in-q3-2018/ http://zindagi.online/2018/12/03/gartner-global-smartphone-s... [1] http://worldpopulationreview.com/us-cities/ http://worldpopulationreview.com/us-cities/
  - blfr 7y ago
    Large cities seem to also depress fertility. https://twitter.com/Cicerone973/status/1124426697972092928 https://twitter.com/Cicerone973/status/1124426697972092928
    - pjc50 7y ago
      That's kind of irrelevant; city growth has always been more a question of internal migration than fertility. (Rome and many pre-industrial cities usually had negative population replacement rates because disease was such a problem. People still came.)
  - Barrin92 7y ago
    Yes, it's just a wrong intuition sold as fact. Millenials have increasingly started to buy larger cars and moved from the big cities to the sunbelt and the suburbs. (https://www.theatlantic.com/business/archive/2017/04/why-is-everyone-leaving-the-city/521844/ https://www.theatlantic.com/business/archive/2017/04/why-is-...) The idea that everyone will be riding around in shared cars and live in the LA megalopolis is a tech industry fantasy.
    - bobthepanda 7y ago
      It’s worth noting that it’s unclear whether or not this is a generational preference for the suburbs, or rather a result of a lack of suburban-equivalent amenities for families like safe parks, good, not-overcrowded schools, and available daycare options. Not to mention a lack of housing at the 2+ bedroom size. It’s still a reversal of the ‘60s and ‘70s where the cities were being abandoned wholesale.
    - coldtea 7y ago
      >The idea that everyone will be riding around in shared cars and live in the LA megalopolis is a tech industry fantasy. It's also nowhere near anything TFA says. What he says is that where people want to live is not very gaussianly (normal) distributed, but there is a peak for major urban centers (LA, NY, SF), and a large plateau of smaller places.
  - coldtea 7y ago
    >I don't think it is true. Just a cursory google search suggests that the market, at least globally, is a lot flatter and is likely flattening. Not everyone has an iPhone or Samsung. He doesn't say that "everyone has an iPhone or Samsung". Quite the opposite. That there's a large flat base of sub-300 phones, and a 10% (or more, depending on country) of people with high end (say over $800 phones), and not much in between.
    - bambax 7y ago
      > That there's a large flat base of sub-300 phones No, actually he doesn't say that. He says that people who don't care about their phone will take one for $0, any phone: > Or, b. you’ve decided that just about every phone out there is ‘good enough’ and is more than adequate for your needs, so you’ll go with whatever one costs $0 with your existing wireless contract. People buy many different phones (including high-end Android phones, and second-hand iPhones); the reality he describes doesn't seem to exist. Also, including people who don't care about Taylor Swift in a study of the value of Taylor Swift concert tickets' value, is absurd: that some people (or even most people) don't want something, doesn't have anything to do with the price of goods. What matters is who wants it and how hard they want it. Some people like Taylor Swift a lot, some like her a little, some like to go to concerts, some like to go out, some are looking for a place to bring a date, etc. etc. The author's binary division is completely artificial.
      - coldtea 7y ago
        He speaks generally, not absolutely. You can see all between price points, but not all have equal peaks -- it's a larger "cheapo" and a smaller but significant "expensivo" segment that dominate, that's the author's point (whether it's true or not). He doesn't say that there are absolutely no cases that fall in between, just that the distribution of them is not normal, but bifurcated to those two extremes.
  - jdavis703 7y ago
    You’re looking at 1% population growth, but much higher real estate growth costs. Looking at real estate demand is probably a better way to measure demand in cities since it’s so hard to build new homes these days.
- mikeash 7y ago
  Not to mention that a person who’s cost conscious about their phone won’t have a contract that included “free” upgrades anyway.
- hn_throwaway_99 7y ago
  And, indeed, Apple's pricing strategy (selling old phones on discount, having multiple versions of the flagship, e.g. "Max" and other) suggests they're trying to hit a broad section of the demand curve.
- username223 7y ago
  That's not even vaguely true. I don't get the supposed dichotomy between giant $1000+ slabs of glass and plastic junk. A few years ago, a friend gave me his old mid-level Samsung phone for free. It was a piece of garbage, and I hated using it, but I put up with it until it died. Afterwards, I looked around for something decent that wasn't too expensive, and settled on a refurbished iPhone SE. It cost a couple hundred dollars, and still works just fine. It doesn't have all of the latest bells and whistles, but it's good enough, and actually fits in my pocket.
- wisty 7y ago
  IIRC it is true, but it's a quirk of the phone market. People either go for the the flagship or for an economy phone, but it's a weird quirk of the mobile market (since most people assume that the cheapest phones are basically as good as midrange phones, or that they're better off with a cheaper phone and more frequent upgrades, so there's no middle). Cars are different. Not everyone buys a Porsche or a Kia.
  - ip26 7y ago
    The vanishing middle is actually happening in many, many markets IMO. You can either get cheap plastic junk or overpriced glam. MacBook Pro or Chromebook. The high quality, no frills, moderate price product- it's gone from most markets. Cars are perhaps one of the few exceptions, maybe due to sheer price setting hard limits on the high end and basic safety setting limits on the low end.
pjc50 7y ago
Tournament wages theory: https://en.wikipedia.org/wiki/Tournament_theory https://en.wikipedia.org/wiki/Tournament_theory This seems to happen whenever there's (a) direct competition (b) the value provided by the winner is very scalable (media, sports, software) and (c) most importantly, it can't be substituted by splitting the job among more people. So footballers follow this model because you can only have 11 people on the pitch - there's no amount of low-wage non-first-worlders you can replace Ronaldo with. Megastars follow this model; if you want to see Taylor Swift, that doesn't substitute cleanly with Ariana Grande or your local bar band. And software engineers follow this to some extent because splitting problems up is in itself the difficult bit.
- onlyrealcuzzo 7y ago
  Software engineers follow for the same reason as footballers or doctors. In football, there's only a market for the best. Nobody likes a loser. It's the same in health. There's no market for mediocre or bad doctors. Similarly, there's not really a market for software that doesn't work. Writing novel software that solves real problems isn't yet trivial. So there's not a huge market for bad software engineers. And there isn't yet a big enough supply of good ones to meet demand. See why Google doesn't just lower their bar to hire more candidates. It wouldn't do them any good.
  - pjc50 7y ago
    Few markets have a market for "bad" employees, surely? What matters in the tournament situation is that the number #2 employee isn't as good as the #1 employee, regardless of what absolute quality level we're talking about.
    - scarejunba 7y ago
      There are things with low differentiation. Average day care is fine. Average janitorial services are okay. Average checkout operator is okay. No one needs the exceptional janitor. Fwiw though, I think there's lots of room for the mediocre software engineer. Enough work requires little to no skill. I've done some of it myself b
jdhn 7y ago
His paragraph about jobs is spot on. I've seen this in my own workplace on a team that is 75% contractors and 25% full time employees. Contractors are seen as completely replaceable, and if one leaves they'll be replaced with another one after a quick round of interviews. However, if a full time employee leaves, the process to replace them seems to take much longer as it appears that those doing the hiring are looking for The Superstar. I'm not sure how to fix this, or if it's even possible to fix.
- xt00 7y ago
  I think people could argue that even years ago many workplaces have been sort of bifurcated between people that would be "first to fire" and those that were "integral", but these days it appears that its become more institutionalized by the use of the contractor and full time employee classes -- I would say generally not a great trend.. seems better to at least allow the illusion to people that are initially considered as less important to have a chance to become more important within the company..
  - newshorts 7y ago
    You’re touching on something that may affect these companies medium/long term. The fact that there’s a class divide among workers now naturally selects out many workers that otherwise might be incentivized to create more wealth for the company. This could have long term consequences in industries that formerly relied on innovation.
- sokoloff 7y ago
  What's to fix? Contractors don't have the same shadow of having to pay out severance or even the emotional investment of having to fire an employee. It seems perfectly natural that management would be much more selective for permanent employee hires than for contractors.
- unreal37 7y ago
  The fix is to always hire contractors, let the bad ones go, and convert the good ones to full time if you can.
SmooL 7y ago
"-Normal distributions come from multifactorial situations, where many variables matter. -In a world governed by scarcity, our decisions and preferences tend to be multifactorial in nature. -In a world governed by abundance, on the other hand, our decisions are no longer multifactorial. They tend to be dominated by one factor above all others: either X matters to you, or it doesn’t." I'm more curious as to _why_ our decisions become dominated by one factor as we approach abundance. It almost seems counter-intuitive: in a world of abundance, wouldn't there be more things we could afford to care about? In a world of scarcity, wouldn't your decision be based mostly by just "does it do what I want it to do"? Maybe we're just lazy. Maybe it's the other way around: in a world of abundance, we can _afford_ to be _lazy_ and not care about nearly as much, and instead focus on singular values. In either case, I'm not convinced that decision distribution is a function of scarcity/abundance, but rather some other factor, of which scarcity/abundance contributes to.
- blfr 7y ago
  In a world of scarcity, wouldn't your decision be based mostly by just "does it do what I want it to do"? Yes but also "can I afford it?", "is it available?", "will it be shipped on time and to my address", etc. When you reach real abundance and everything is at your fingertips, the only factor that matters is whether you want it.
- bluetomcat 7y ago
  > I'm more curious as to _why_ our decisions become dominated by one factor as we approach abundance. I would speculate that it comes down to the availability of too many different "classes" of products and services, which are often self-exclusive. There is only so much time in a day to consume a limited amount of these products and services. People's time and attention span is the limiting factor. Let's say that you are in the market for entertaining yourself in some way. You can entertain yourself by riding on a rollercoaster, by watching movies, by driving a sportscar, by hiking, by doing photography. There is too much choice, and you eventually pick only one or two of these activities and they eventually become your "favourites". You become addicted, you prefer buying only high-end, specialised equipment, and you skew the market of that product accordingly.
- 7y ago
geitir 7y ago
I would predict things tend toward the bi distribution the article talks about during market lulls and that competition rather than abundance creates the gaussian distribution. In the example of smartphones given, there hasn't been the same rapid progress as there was between each generation even a few years ago. So most middle of the road smartphones are all fairly comparable. That said, if someone wanted to take the energy and time to find the best available of this mid tier I'm sure they could, it's just the majority seeking the middle of the road find the average of this tier good enough. If any revolutionary comes out again soon I would guess there would be an immediate gaussian distribution again
opportune 7y ago
This is a dumb article. Wow, the author rediscovered a beta distribution without knowing what a beta distribution is.
- JMTQp8lwXL 7y ago
  Not everyone is an expert in statistics. But there were many other interesting points beyond the statistical in the article, like the implication of this phenomena on our economy.
JackFr 7y ago
This is pretty muddled thinking. He talks about categorical variables and then points out that they are not normally distributed. Which doesn’t make sense. (It almost could, but he skips an important step.) Apart from that it's mostly handwaving and opinion with no actual data. When you don't use data it's unsurprising that your personal experience matches your hypothesis.
- nkozyra 7y ago
  Yeah, I felt like there is perpetually a point the author is about to get but then just moves on to the next thought. Kind of frustrating to read, honestly.
- coldtea 7y ago
  >He talks about categorical variables and then points out that they are not normally distributed. Smartphone prices and city populations are not categorical variables...
- ErikVandeWater 7y ago
  Yes, he just chose a satisfactory cutoff for whatever counts as a "true" flagship. Some people would say only this generation iPhone. Some would say only this generation iPhone + Pixel + Galaxy. Some would say this generation, and the previous generation of iPhone + Pixel + Galaxy. And even then, we're ignoring features like internal storage capacity for each phone. Even if you are making $10 million a year, you split that between your yacht, your car, your mansion, and jewelry for the wifey. You aren't going to have the biggest mega-yacht and no jewelry for the wifey, so there will be a tapering at the higher end of the demand curve for yachts for people making $10 million a year.
- febeling 7y ago
  True. Still an interesting idea, even if it needs verification (or falsification).
deleted 7y ago
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in_cahoots 7y ago
The author almost stumbles on the answer to his question when he shows the height distribution. It’s bimodal, because men and women have different average heights. Similarly, flagship and lower-tier phone buyers will display distributions in what they’re willing to pay. If you combine two separate normal distributions you can always make a claim that a single distribution is no longer normal. But that doesn’t make it an interesting insight on its face.
- mrob 7y ago
  It's not similar to height distribution. At the population statistics level, human height is bimodal because humans either have a Y chromosome or they don't. What is the equivalent binary variable for the phone market?
  - deleted 7y ago
    [deleted]
  - coldtea 7y ago
    Obviously income. Are you in the upper 20% that does great (or still fine), or in the 80% that's increasingly scrapping by?
    - mrob 7y ago
      Except income is no longer bimodal. It was back in the 70s, but now there's just a single peak. See: https://ourworldindata.org/uploads/2013/12/Global-inequality-in-1800-1975-and-2015.png https://ourworldindata.org/uploads/2013/12/Global-inequality... However, growth in income is bimodal: https://commons.wikimedia.org/wiki/File:Global_changes_in_real_income_by_income_percentile_-_v1.png https://commons.wikimedia.org/wiki/File:Global_changes_in_re... Could that affect the phone market indirectly, by consumer confidence? It's possible, but it's not nearly as clear-cut as human height.
      - coldtea 7y ago
        Also account for wealth (we don't make the distinction between income and wealth much in my here parts).
JMTQp8lwXL 7y ago
If this author's conjectures are correct (and I think there's some truth to them), my honest response is not care about anything. Because I'm not willing to be price gouged. If I know that something priced at the top end for the sake of it, I won't pay. I don't need to care about Taylor Swift that much. I don't need the latest smartphone. This doesn't work with everything; for example, I could need access to health care. But for the vast majority of non life-or-death purchases, I'll opt-out. I don't think I agree with the rationale: the bifurcation is more likely based in economics. Niche appeal at 10x the cost might be more profitable that reasonably priced, mass appeal products. E.g., when it comes to things like Taylor Swift tickets. I'm unwilling to spend a few hundred dollars to see her. These live performances are for people who are.
coldtea 7y ago
>We can see, too, that these bifurcations are driven by a shift from a world of scarcity to a world of abundance. To me all these bifurcations seem to me to stem from a change of a world of more evenly distributed wealth (for working, lower middle, and middle class) and one with wild inequality. It's a world where a 10-20% can afford the "whatever" (e.g. best phone, live in NY/Bay area, university degree, etc) and the rest have to scrap by and increasingly pinch pennies (while still doing some desperate wealth-signalling purchases, like poor urban blacks that buy $200 sneakers to feel like they have something nice and can participate in the kind of society they see in ads). Back in the 50s and up to the 80s a signle-income middle class household could still send a kid to college, buy a house, and so on. And living in NY or the Bay are was still very affordable (to the point that both areas had large artistic / bohemian communities living there, and not of the latte sipping urban wealth variety, but the penny pinching / stick it to the man / junky variety).
- Jonanin 7y ago
  500 years ago, only 1-2% could afford "whatever" and the rest had to scrap by and pinch pennies. I'm not sure we're moving to a world of less evenly distributed wealth.
  - coldtea 7y ago
    Only we're not beasts. Wealth is social and relative based on the era. E.g. nobody feels like a champion as a unemployed homeless in LA, or a single mom making ends meet hand-to-mouth, just because 8000 years ago other people lived in caves, died at 30, and where often hunted by wild animals... The change compared to not-so-distant decades, when a single-income middle class family had a job for life, could afford a house, and college education for their kids -- compared to living paycheck to paycheck is more relevant to whether we enter a world of more inequality, than what they did in the caves or the wild west.
  - iheartpotatoes 7y ago
    Cute, but facts?
unreal37 7y ago
One phenomenon in the "concert ticket" space is that promoters have discovered a way to dynamically price tickets. So you'll pay the concert promoter $1000 to sit front and center. So instead of all floor tickets being $100, there are some floor tickets that are worth way, way more than others. Even "row 1" tickets up in the 3rd deck are more than row 2 tickets in the same section now. Ticket pricing has evolved to maximize profits at the source. The value of the tickets is very close to their retail price. So if you ask "how much would you pay for Taylor Swift tickets", the answer is "depends on what row".
mac01021 7y ago
Caring about something is not a binary, all-or-nothing affair. I care about some things a lot, others a fair amount, and yet others quite little. And for most of the examples given in the OP, I still find myself landing in the middle, between two supposed modes. So I guess I'm not entirely convinced.
narrator 7y ago
I wish this guy had some data to back his ideas up.
- cfarm 7y ago
  Yes - it would be interesting if you could somehow tie this to our record low unemployment and low inflationary environment.
deleted 7y ago
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stackzero 7y ago
I like the idea but it seems the author is just slicing the normal distribution at a point of interest and calling it bifurcated? e.g. with the phone example. "good enough android" or "iphone / flagship android" all the actual phone models are hidden under two higher level labels. Isn't every decision making process with buying essentially try to get the best for your money?
mywittyname 7y ago
Lots of things follow a Pareto distribution (which is what the author is describing). This is the default distribution for anything that relies on network effects and competes in a market with limited availability. Famously, word usage follows this pattern (Zipf's law). But other things such as wealth accumulation, product usage, celebrity fame, upvotes on Reddit, etc all have this distribution. It's not possible for every person to read every post, evaluate every possible drink, or watch every movie, so they settle on one of the most immediately available options. So they drink a Coke while watching The Avengers and upvote the top-rated comment on Reddit about it.

222 points by ranvir 7y ago

> Chances are good that if you’re in the market for a smartphone, you fall into one of two very clear cut categories. Either: a. you’ve decided that your new phone is a very important item in your life, so you’re going to buy the nicest phone available at whatever price. (Usually this means an iPhone, although some flagship Android phones qualify for this category.) Or, b. you’ve decided that just about every phone out there is ‘good enough’ and is more than adequate for your needs, so you’ll go with whatever one costs $0 with your existing wireless contract. He doesn't provide any figure, he just says things and consider them to be true.

bko 7y ago
I don't think it is true. Just a cursory google search suggests that the market, at least globally, is a lot flatter and is likely flattening. Not everyone has an iPhone or Samsung. [0] Similarly, those large cities he lists (LA, New York and San Fran) have relatively low population growth, at 0.67%, 0.25% and 1% respectively [1]. Large cities like Phoenix, and Austin have around 2% growth. This makes more sense to me. As these cities become crowded and expensive, people will naturally look for a better deal. These types of articles are just lazy. The author doesn't even seem to bother doing basic research. [0] http://zindagi.online/2018/12/03/gartner-global-smartphone-shipments-grew-1-4-in-q3-2018/ http://zindagi.online/2018/12/03/gartner-global-smartphone-s... [1] http://worldpopulationreview.com/us-cities/ http://worldpopulationreview.com/us-cities/
- blfr 7y ago
  Large cities seem to also depress fertility. https://twitter.com/Cicerone973/status/1124426697972092928 https://twitter.com/Cicerone973/status/1124426697972092928
  - pjc50 7y ago
    That's kind of irrelevant; city growth has always been more a question of internal migration than fertility. (Rome and many pre-industrial cities usually had negative population replacement rates because disease was such a problem. People still came.)
- Barrin92 7y ago
  Yes, it's just a wrong intuition sold as fact. Millenials have increasingly started to buy larger cars and moved from the big cities to the sunbelt and the suburbs. (https://www.theatlantic.com/business/archive/2017/04/why-is-everyone-leaving-the-city/521844/ https://www.theatlantic.com/business/archive/2017/04/why-is-...) The idea that everyone will be riding around in shared cars and live in the LA megalopolis is a tech industry fantasy.
  - bobthepanda 7y ago
    It’s worth noting that it’s unclear whether or not this is a generational preference for the suburbs, or rather a result of a lack of suburban-equivalent amenities for families like safe parks, good, not-overcrowded schools, and available daycare options. Not to mention a lack of housing at the 2+ bedroom size. It’s still a reversal of the ‘60s and ‘70s where the cities were being abandoned wholesale.
  - coldtea 7y ago
    >The idea that everyone will be riding around in shared cars and live in the LA megalopolis is a tech industry fantasy. It's also nowhere near anything TFA says. What he says is that where people want to live is not very gaussianly (normal) distributed, but there is a peak for major urban centers (LA, NY, SF), and a large plateau of smaller places.
- coldtea 7y ago
  >I don't think it is true. Just a cursory google search suggests that the market, at least globally, is a lot flatter and is likely flattening. Not everyone has an iPhone or Samsung. He doesn't say that "everyone has an iPhone or Samsung". Quite the opposite. That there's a large flat base of sub-300 phones, and a 10% (or more, depending on country) of people with high end (say over $800 phones), and not much in between.
  - bambax 7y ago
    > That there's a large flat base of sub-300 phones No, actually he doesn't say that. He says that people who don't care about their phone will take one for $0, any phone: > Or, b. you’ve decided that just about every phone out there is ‘good enough’ and is more than adequate for your needs, so you’ll go with whatever one costs $0 with your existing wireless contract. People buy many different phones (including high-end Android phones, and second-hand iPhones); the reality he describes doesn't seem to exist. Also, including people who don't care about Taylor Swift in a study of the value of Taylor Swift concert tickets' value, is absurd: that some people (or even most people) don't want something, doesn't have anything to do with the price of goods. What matters is who wants it and how hard they want it. Some people like Taylor Swift a lot, some like her a little, some like to go to concerts, some like to go out, some are looking for a place to bring a date, etc. etc. The author's binary division is completely artificial.
    - coldtea 7y ago
      He speaks generally, not absolutely. You can see all between price points, but not all have equal peaks -- it's a larger "cheapo" and a smaller but significant "expensivo" segment that dominate, that's the author's point (whether it's true or not). He doesn't say that there are absolutely no cases that fall in between, just that the distribution of them is not normal, but bifurcated to those two extremes.
- jdavis703 7y ago
  You’re looking at 1% population growth, but much higher real estate growth costs. Looking at real estate demand is probably a better way to measure demand in cities since it’s so hard to build new homes these days.
mikeash 7y ago
Not to mention that a person who’s cost conscious about their phone won’t have a contract that included “free” upgrades anyway.
hn_throwaway_99 7y ago
And, indeed, Apple's pricing strategy (selling old phones on discount, having multiple versions of the flagship, e.g. "Max" and other) suggests they're trying to hit a broad section of the demand curve.
username223 7y ago
That's not even vaguely true. I don't get the supposed dichotomy between giant $1000+ slabs of glass and plastic junk. A few years ago, a friend gave me his old mid-level Samsung phone for free. It was a piece of garbage, and I hated using it, but I put up with it until it died. Afterwards, I looked around for something decent that wasn't too expensive, and settled on a refurbished iPhone SE. It cost a couple hundred dollars, and still works just fine. It doesn't have all of the latest bells and whistles, but it's good enough, and actually fits in my pocket.
wisty 7y ago
IIRC it is true, but it's a quirk of the phone market. People either go for the the flagship or for an economy phone, but it's a weird quirk of the mobile market (since most people assume that the cheapest phones are basically as good as midrange phones, or that they're better off with a cheaper phone and more frequent upgrades, so there's no middle). Cars are different. Not everyone buys a Porsche or a Kia.
- ip26 7y ago
  The vanishing middle is actually happening in many, many markets IMO. You can either get cheap plastic junk or overpriced glam. MacBook Pro or Chromebook. The high quality, no frills, moderate price product- it's gone from most markets. Cars are perhaps one of the few exceptions, maybe due to sheer price setting hard limits on the high end and basic safety setting limits on the low end.

pjc50 7y ago

Tournament wages theory: https://en.wikipedia.org/wiki/Tournament_theory https://en.wikipedia.org/wiki/Tournament_theory This seems to happen whenever there's (a) direct competition (b) the value provided by the winner is very scalable (media, sports, software) and (c) most importantly, it can't be substituted by splitting the job among more people. So footballers follow this model because you can only have 11 people on the pitch - there's no amount of low-wage non-first-worlders you can replace Ronaldo with. Megastars follow this model; if you want to see Taylor Swift, that doesn't substitute cleanly with Ariana Grande or your local bar band. And software engineers follow this to some extent because splitting problems up is in itself the difficult bit.

onlyrealcuzzo 7y ago
Software engineers follow for the same reason as footballers or doctors. In football, there's only a market for the best. Nobody likes a loser. It's the same in health. There's no market for mediocre or bad doctors. Similarly, there's not really a market for software that doesn't work. Writing novel software that solves real problems isn't yet trivial. So there's not a huge market for bad software engineers. And there isn't yet a big enough supply of good ones to meet demand. See why Google doesn't just lower their bar to hire more candidates. It wouldn't do them any good.
- pjc50 7y ago
  Few markets have a market for "bad" employees, surely? What matters in the tournament situation is that the number #2 employee isn't as good as the #1 employee, regardless of what absolute quality level we're talking about.
  - scarejunba 7y ago
    There are things with low differentiation. Average day care is fine. Average janitorial services are okay. Average checkout operator is okay. No one needs the exceptional janitor. Fwiw though, I think there's lots of room for the mediocre software engineer. Enough work requires little to no skill. I've done some of it myself b

jdhn 7y ago

His paragraph about jobs is spot on. I've seen this in my own workplace on a team that is 75% contractors and 25% full time employees. Contractors are seen as completely replaceable, and if one leaves they'll be replaced with another one after a quick round of interviews. However, if a full time employee leaves, the process to replace them seems to take much longer as it appears that those doing the hiring are looking for The Superstar. I'm not sure how to fix this, or if it's even possible to fix.

xt00 7y ago
I think people could argue that even years ago many workplaces have been sort of bifurcated between people that would be "first to fire" and those that were "integral", but these days it appears that its become more institutionalized by the use of the contractor and full time employee classes -- I would say generally not a great trend.. seems better to at least allow the illusion to people that are initially considered as less important to have a chance to become more important within the company..
- newshorts 7y ago
  You’re touching on something that may affect these companies medium/long term. The fact that there’s a class divide among workers now naturally selects out many workers that otherwise might be incentivized to create more wealth for the company. This could have long term consequences in industries that formerly relied on innovation.
sokoloff 7y ago
What's to fix? Contractors don't have the same shadow of having to pay out severance or even the emotional investment of having to fire an employee. It seems perfectly natural that management would be much more selective for permanent employee hires than for contractors.
unreal37 7y ago
The fix is to always hire contractors, let the bad ones go, and convert the good ones to full time if you can.

SmooL 7y ago

"-Normal distributions come from multifactorial situations, where many variables matter. -In a world governed by scarcity, our decisions and preferences tend to be multifactorial in nature. -In a world governed by abundance, on the other hand, our decisions are no longer multifactorial. They tend to be dominated by one factor above all others: either X matters to you, or it doesn’t." I'm more curious as to _why_ our decisions become dominated by one factor as we approach abundance. It almost seems counter-intuitive: in a world of abundance, wouldn't there be more things we could afford to care about? In a world of scarcity, wouldn't your decision be based mostly by just "does it do what I want it to do"? Maybe we're just lazy. Maybe it's the other way around: in a world of abundance, we can _afford_ to be _lazy_ and not care about nearly as much, and instead focus on singular values. In either case, I'm not convinced that decision distribution is a function of scarcity/abundance, but rather some other factor, of which scarcity/abundance contributes to.

blfr 7y ago
In a world of scarcity, wouldn't your decision be based mostly by just "does it do what I want it to do"? Yes but also "can I afford it?", "is it available?", "will it be shipped on time and to my address", etc. When you reach real abundance and everything is at your fingertips, the only factor that matters is whether you want it.
bluetomcat 7y ago
> I'm more curious as to _why_ our decisions become dominated by one factor as we approach abundance. I would speculate that it comes down to the availability of too many different "classes" of products and services, which are often self-exclusive. There is only so much time in a day to consume a limited amount of these products and services. People's time and attention span is the limiting factor. Let's say that you are in the market for entertaining yourself in some way. You can entertain yourself by riding on a rollercoaster, by watching movies, by driving a sportscar, by hiking, by doing photography. There is too much choice, and you eventually pick only one or two of these activities and they eventually become your "favourites". You become addicted, you prefer buying only high-end, specialised equipment, and you skew the market of that product accordingly.
7y ago

geitir 7y ago

I would predict things tend toward the bi distribution the article talks about during market lulls and that competition rather than abundance creates the gaussian distribution. In the example of smartphones given, there hasn't been the same rapid progress as there was between each generation even a few years ago. So most middle of the road smartphones are all fairly comparable. That said, if someone wanted to take the energy and time to find the best available of this mid tier I'm sure they could, it's just the majority seeking the middle of the road find the average of this tier good enough. If any revolutionary comes out again soon I would guess there would be an immediate gaussian distribution again

opportune 7y ago

This is a dumb article. Wow, the author rediscovered a beta distribution without knowing what a beta distribution is.

JMTQp8lwXL 7y ago
Not everyone is an expert in statistics. But there were many other interesting points beyond the statistical in the article, like the implication of this phenomena on our economy.

JackFr 7y ago

This is pretty muddled thinking. He talks about categorical variables and then points out that they are not normally distributed. Which doesn’t make sense. (It almost could, but he skips an important step.) Apart from that it's mostly handwaving and opinion with no actual data. When you don't use data it's unsurprising that your personal experience matches your hypothesis.

nkozyra 7y ago
Yeah, I felt like there is perpetually a point the author is about to get but then just moves on to the next thought. Kind of frustrating to read, honestly.
coldtea 7y ago
>He talks about categorical variables and then points out that they are not normally distributed. Smartphone prices and city populations are not categorical variables...
ErikVandeWater 7y ago
Yes, he just chose a satisfactory cutoff for whatever counts as a "true" flagship. Some people would say only this generation iPhone. Some would say only this generation iPhone + Pixel + Galaxy. Some would say this generation, and the previous generation of iPhone + Pixel + Galaxy. And even then, we're ignoring features like internal storage capacity for each phone. Even if you are making $10 million a year, you split that between your yacht, your car, your mansion, and jewelry for the wifey. You aren't going to have the biggest mega-yacht and no jewelry for the wifey, so there will be a tapering at the higher end of the demand curve for yachts for people making $10 million a year.
febeling 7y ago
True. Still an interesting idea, even if it needs verification (or falsification).

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in_cahoots 7y ago

The author almost stumbles on the answer to his question when he shows the height distribution. It’s bimodal, because men and women have different average heights. Similarly, flagship and lower-tier phone buyers will display distributions in what they’re willing to pay. If you combine two separate normal distributions you can always make a claim that a single distribution is no longer normal. But that doesn’t make it an interesting insight on its face.

mrob 7y ago
It's not similar to height distribution. At the population statistics level, human height is bimodal because humans either have a Y chromosome or they don't. What is the equivalent binary variable for the phone market?
- deleted 7y ago
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- coldtea 7y ago
  Obviously income. Are you in the upper 20% that does great (or still fine), or in the 80% that's increasingly scrapping by?
  - mrob 7y ago
    Except income is no longer bimodal. It was back in the 70s, but now there's just a single peak. See: https://ourworldindata.org/uploads/2013/12/Global-inequality-in-1800-1975-and-2015.png https://ourworldindata.org/uploads/2013/12/Global-inequality... However, growth in income is bimodal: https://commons.wikimedia.org/wiki/File:Global_changes_in_real_income_by_income_percentile_-_v1.png https://commons.wikimedia.org/wiki/File:Global_changes_in_re... Could that affect the phone market indirectly, by consumer confidence? It's possible, but it's not nearly as clear-cut as human height.
    - coldtea 7y ago
      Also account for wealth (we don't make the distinction between income and wealth much in my here parts).

JMTQp8lwXL 7y ago

If this author's conjectures are correct (and I think there's some truth to them), my honest response is not care about anything. Because I'm not willing to be price gouged. If I know that something priced at the top end for the sake of it, I won't pay. I don't need to care about Taylor Swift that much. I don't need the latest smartphone. This doesn't work with everything; for example, I could need access to health care. But for the vast majority of non life-or-death purchases, I'll opt-out. I don't think I agree with the rationale: the bifurcation is more likely based in economics. Niche appeal at 10x the cost might be more profitable that reasonably priced, mass appeal products. E.g., when it comes to things like Taylor Swift tickets. I'm unwilling to spend a few hundred dollars to see her. These live performances are for people who are.

coldtea 7y ago

>We can see, too, that these bifurcations are driven by a shift from a world of scarcity to a world of abundance. To me all these bifurcations seem to me to stem from a change of a world of more evenly distributed wealth (for working, lower middle, and middle class) and one with wild inequality. It's a world where a 10-20% can afford the "whatever" (e.g. best phone, live in NY/Bay area, university degree, etc) and the rest have to scrap by and increasingly pinch pennies (while still doing some desperate wealth-signalling purchases, like poor urban blacks that buy $200 sneakers to feel like they have something nice and can participate in the kind of society they see in ads). Back in the 50s and up to the 80s a signle-income middle class household could still send a kid to college, buy a house, and so on. And living in NY or the Bay are was still very affordable (to the point that both areas had large artistic / bohemian communities living there, and not of the latte sipping urban wealth variety, but the penny pinching / stick it to the man / junky variety).

Jonanin 7y ago
500 years ago, only 1-2% could afford "whatever" and the rest had to scrap by and pinch pennies. I'm not sure we're moving to a world of less evenly distributed wealth.
- coldtea 7y ago
  Only we're not beasts. Wealth is social and relative based on the era. E.g. nobody feels like a champion as a unemployed homeless in LA, or a single mom making ends meet hand-to-mouth, just because 8000 years ago other people lived in caves, died at 30, and where often hunted by wild animals... The change compared to not-so-distant decades, when a single-income middle class family had a job for life, could afford a house, and college education for their kids -- compared to living paycheck to paycheck is more relevant to whether we enter a world of more inequality, than what they did in the caves or the wild west.
- iheartpotatoes 7y ago
  Cute, but facts?

unreal37 7y ago

One phenomenon in the "concert ticket" space is that promoters have discovered a way to dynamically price tickets. So you'll pay the concert promoter $1000 to sit front and center. So instead of all floor tickets being $100, there are some floor tickets that are worth way, way more than others. Even "row 1" tickets up in the 3rd deck are more than row 2 tickets in the same section now. Ticket pricing has evolved to maximize profits at the source. The value of the tickets is very close to their retail price. So if you ask "how much would you pay for Taylor Swift tickets", the answer is "depends on what row".

mac01021 7y ago

Caring about something is not a binary, all-or-nothing affair. I care about some things a lot, others a fair amount, and yet others quite little. And for most of the examples given in the OP, I still find myself landing in the middle, between two supposed modes. So I guess I'm not entirely convinced.

narrator 7y ago

I wish this guy had some data to back his ideas up.

cfarm 7y ago
Yes - it would be interesting if you could somehow tie this to our record low unemployment and low inflationary environment.

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stackzero 7y ago

I like the idea but it seems the author is just slicing the normal distribution at a point of interest and calling it bifurcated? e.g. with the phone example. "good enough android" or "iphone / flagship android" all the actual phone models are hidden under two higher level labels. Isn't every decision making process with buying essentially try to get the best for your money?

mywittyname 7y ago

Lots of things follow a Pareto distribution (which is what the author is describing). This is the default distribution for anything that relies on network effects and competes in a market with limited availability. Famously, word usage follows this pattern (Zipf's law). But other things such as wealth accumulation, product usage, celebrity fame, upvotes on Reddit, etc all have this distribution. It's not possible for every person to read every post, evaluate every possible drink, or watch every movie, so they settle on one of the most immediately available options. So they drink a Coke while watching The Avengers and upvote the top-rated comment on Reddit about it.